An increase in the interest rate creates a _ the money demand curve, and an increase in real GDP creates a the money demand curve.
A) movement down along; leftward shift of
B) rightward shift of; movement up along
C) leftward shift of; rightward shift of
D) movement up along; rightward shift of

Question

Quizplus · Accepted Answer

An increase in the interest rate causes a movement up along the money demand curve because higher interest rates make holding money less attractive. An increase in real GDP increases the demand for transactions, shifting the money demand curve to the right.

An Increase in the Interest Rate Creates a _ the Money