A decline in the expected inflation rate causes the demand for money to ________ and the demand curve to shift to the ________.
A) decrease; right
B) decrease; left
C) increase; right
D) increase; left

Question

Quizplus · Accepted Answer

A decline in expected inflation rate means that people expect prices to increase at a slower rate in the future. As a result, they will need less money to purchase goods and services in the future. Therefore, the demand for money will decrease, and the demand curve will shift to the left.

A Decline in the Expected Inflation Rate Causes the Demand