An increase in the opportunity cost of holding money creates a the money demand curve and an increase in real GDP creates a _ the money demand curve.

Question

Quizplus · Accepted Answer

An increase in the opportunity cost of holding money would lead to individuals and households demanding less money at any given level of income. Therefore, the money demand curve would shift to the left. This is represented in option C as a movement up along the curve and a rightward shift. An increase in real GDP, on the other hand, would lead to an increase in the demand for money as more transactions are taking place in the economy. This would lead to a rightward shift of the money demand curve, as indicated in option C.

An Increase in the Opportunity Cost of Holding Money Creates