Which of the following shifts the demand for money curve?
i. change in the nominal interest rate
ii. change in real GDP
iii. change in the price level
A) i only
B) ii only
C) iii only
D) ii and iii
E) i, ii, and iii

Question

Quizplus · Accepted Answer

- An increase in real GDP implies an increase in the demand for money, hence shifting the demand for money curve to the right. Therefore, option ii is correct.
- An increase in the price level increases the demand for money to finance transactions, shifting the demand for money curve to the right. Therefore, option iii is correct.
- An increase in the nominal interest rate would decrease the demand for money, shifting the demand for money curve to the left. Hence, option i is incorrect.

Which of the Following Shifts the Demand for Money Curve