Everything else remaining the same, an increase in real GDP
A)increases the demand for real money.
B)decreases the demand for real money.
C)does not change the demand for real money.
D)increases the demand for real money up to a point, and then demand will automatically fall.
E)decreases the demand for real money up to a point, and then demand will automatically rise.

Question

Quizplus · Accepted Answer

An increase in real GDP leads to an increase in income and therefore an increase in the demand for goods and services. Since money is required to purchase goods and services, the demand for money also increases. Hence, an increase in real GDP increases the demand for real money.

Everything Else Remaining the Same, an Increase in Real GDP