Which of the following would lead to a rightward shift of the money demand curve?
A) A decrease in the price level
B) A decrease in output
C) An open market sale of bonds by the Fed
D) An increase in the price level
E) An open market purchase of bonds by the Fed.

Question

Quizplus · Accepted Answer

According to the theory of money demand, an increase in the price level leads to a higher demand for money as people need more money to purchase the same quantity of goods and services. As a result, the money demand curve shifts rightward.

Which of the Following Would Lead to a Rightward Shift