Which line in the above graph would best reflect the slope of the transactions demand for money curve?
A)line 1
B)line 2
C)line 3
D)line 4

Question

Which line in the above graph would best reflect the slope of the transactions demand for money curve?
A)line 1 
B)line 2 
C)line 3 
D)line 4

Quizplus · Accepted Answer

The slope of the transactions demand for money curve reflects the relationship between the level of real GDP and the level of nominal transactions. As real GDP increases, the demand for money for transactions also increases. Therefore, the slope of the transactions demand for money curve should be positive. Line 2 on the graph shows a positive slope that best reflects the transactions demand for money curve.

Which Line in the Above Graph Would Best Reflect the Slope