An increase in the nominal interest rate
A) shifts the demand for money curve rightward.
B) shifts the demand for money curve leftward.
C) leads to an upward movement along the demand for money curve.
D) leads to a downward movement along the demand for money curve.

Question

Quizplus · Accepted Answer

An increase in the nominal interest rate does not shift the demand for money curve but rather leads to an upward movement along the demand for money curve, as people will want to hold less money due to the higher opportunity cost of holding money instead of investing it.

An Increase in the Nominal Interest Rate