In the market for money,a decline in the expected inflation rate causes the demand for money to ________ and the demand curve to shift to the ________,everything else held constant.
A)decrease;right
B)decrease;left
C)increase;right
D)increase;left

Question

Quizplus · Accepted Answer

A decline in the expected inflation rate means that people expect prices to increase at a slower rate in the future. As a result, they will need less money to purchase the same amount of goods than they previously thought, leading to a decrease in the demand for money. This causes the demand curve to shift to the left, indicating a lower quantity of money demanded at each interest rate.

In the Market for Money,a Decline in the Expected Inflation