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 is typically positive but less than unity (i.e., less than 1), which means that the curve is upward sloping but less steep than the unit slope. Line 2 in the graph shows a similar upward sloping curve with a slope less than 1, making it the best reflection of the transactions demand for money curve. The other lines in the graph do not have the same characteristics as the transactions demand for money curve.

Which Line in the Above Graph Would Best Reflect the Slope