When real GDP increases, the demand for money ________ and the demand for money curve ________.
A) increases; shifts rightward
B) increases; shifts leftward
C) decreases; shifts rightward
D) decreases; shifts leftward
E) does not change; does not shift

Question

Quizplus · Accepted Answer

When real GDP increases, people and firms have more income and thus they will have a higher demand for money to conduct transactions. This results in an increase in the demand for money, causing the demand for money curve to shift rightward.

When Real GDP Increases, the Demand for Money ________ and the Demand