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Suppose the Demand for Real Money Balance Function Is KY

Question 54

Multiple Choice

Suppose the demand for real money balance function is kY - hi, where Y is real GDP and i is the market interest rate. The demand curve for real money balance in a diagram (with interest rates on the vertical axis) :


A) will shift to the right as GDP decreases.
B) will move up the line as GDP decreases.
C) will shift to the left as GDP decreases.
D) will shift neither to the left nor to the right as GDP decreases.

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