Multiple Choice
-Refer to Figure . Which of the following is most likely to occur next?
A) Decreases in the interest rate will cause the demand for real money balances to increase.
B) Increases in the interest rate will cause the demand for real money balances to decrease.
C) Overall prices will fall, leading to a further rightward shift of the money supply curve.
D) Real income will increase, leading to an increase in the demand for real money balances.
Correct Answer:
Verified
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