Between 2008 and 2009, U.S. real GDP decreased from $13.2 trillion to $12.9 trillion. As a result, the real demand for money ________and the demand for money curve_________ .
A) decreased; shifted rightward.
B) did not change; did not shift
C) increased; shifted leftward
D) decreased; shifted leftward

Question

Quizplus · Accepted Answer

When real GDP decreases, individuals and firms tend to hold onto their money rather than investing or spending it. This leads to a decreased demand for money, causing the demand for money curve to shift leftward.