real GDP increases the demand for money and the interest rate decreases the quantity of money demanded.
A) Increasing; decreasing
B) Decreasing; increasing
C) Decreasing; decreasing
D) Increasing; increasing

Question

Quizplus · Accepted Answer

When real GDP increases, people have more income and transactions, leading to an increased demand for money. As the interest rate decreases, the opportunity cost of holding money is lower, which increases the quantity of money demanded.

Real GDP Increases the Demand for Money and the Interest