As income rises ________.
A)the number of transactions households and firms undertake should increase
B)wealth also rises
C)demand for real money balances should increase
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

As income rises, the number of transactions households and firms undertake usually increase. This may occur due to individuals having more disposable income to spend on goods and services. As a result, firms may see an increase in sales and transaction volumes. Additionally, as income rises, wealth may also increase, as individuals may invest and save more. This can cause an increase in demand for real money balances, as individuals seek to hold a portion of their income in liquid, easily accessible form. Therefore, all of the above choices are true.

As Income Rises ________