As income and production rise,the demand for real money balances will ________ and interest rates will ________.
A)fall;fall
B)rise;rise
C)rise;fall
D)fall;rise

Question

Quizplus · Accepted Answer

As income and production rise, the demand for transactions increases, leading to a higher demand for real money balances. To maintain these balances, interest rates will rise to equilibrate the money market.

As Income and Production Rise,the Demand for Real Money Balances