The demand for money increases and the demand for money curve shifts rightward if
A) the real interest rate increase.
B) the nominal interest rate increases.
C) the price level increases.
D) the inflation rate increases.
E) real GDP decreases.

Question

Quizplus · Accepted Answer

An increase in the price level leads to an increase in the demand for money, as individuals and businesses need more money to carry out transactions at the higher prices. This results in a rightward shift of the demand for money curve. None of the other options would lead to an increase in the demand for money.

The Demand for Money Increases and the Demand for Money