The demand for money curve is in the figure above.
-A movement from point B to point C could be the result of
A) a fall in the nominal interest rate.
B) a decrease in the total benefit from holding money.
C) an increase in the quantity of money held by banks.
D) a rise in the real interest rate.
E) a rise in the real interest rate matched by an equal fall in the nominal interest rate.

Question

The demand for money curve is in the figure above.
-A movement from point B to point C could be the result of
A) a fall in the nominal interest rate. 
B) a decrease in the total benefit from holding money. 
C) an increase in the quantity of money held by banks. 
D) a rise in the real interest rate. 
E) a rise in the real interest rate matched by an equal fall in the nominal interest rate.

Quizplus · Accepted Answer

A movement from point B to point C on the demand for money curve would represent an increase in the quantity of money demanded at a given nominal interest rate. This could occur if there was a fall in the nominal interest rate, which would make holding money relatively more attractive compared to other assets, leading to an increase in demand for money.

The Demand for Money Curve Is in the Figure Above