Real demand for money is positively related to the level of real income in the economy.

Question

Quizplus · Accepted Answer

Real demand for money refers to the amount of money that people or businesses are willing to hold for transactions or investment purposes. As real income increases, people tend to demand more money to finance additional consumption and investment activities, leading to a positive relationship between real income and real demand for money. This is known as the income effect on the demand for money.

Real Demand for Money Is Positively Related to the Level