The long-run money demand curve shows
A) that the value of money influences the quantity of money that households and firms plan to hold.
B) that the value of money is directly related to the quantity of money demanded.
C) the relationship between real GDP and money demand.
D) the relationship between potential GDP and money demand.
E) how the Fed determines the appropriate interest rate.

Question

Quizplus · Accepted Answer

The long-run money demand curve shows how the quantity of money demanded is influenced by the value of money. This value, in turn, is affected by factors such as the price level, real GDP, and the interest rate. Therefore, the correct answer is A.

The Long-Run Money Demand Curve Shows