What will happen to the demand for reserves if real GDP increases?
A)It will shift outward.
B)It will shift inward.
C)It will remain unchanged.
D)It depends on what happens to interest rates.

Question

Quizplus · Accepted Answer

When real GDP increases, economic activity expands, leading to higher demand for loans and transactions. This increase in economic activity causes banks to demand more reserves to meet the needs of their customers, thus shifting the demand for reserves outward.

What Will Happen to the Demand for Reserves If Real