Exhibit 14-1

-Refer to the graph in the exhibit.Suppose there is an increase in level of GDP.What will this increase cause?
A) a move from B to A
B) a move from A to B
C) a move from DM to DM'
D) a move from DM to DM*

Question

Exhibit 14-1
 
-Refer to the graph in the exhibit.Suppose there is an increase in level of GDP.What will this increase cause?  
A) a move from B to A 
B) a move from A to B 
C) a move from DM to DM' 
D) a move from DM to DM*

Quizplus · Accepted Answer

An increase in level of GDP will cause a shift in the demand for money from DM to DM', which represents an increase in demand for money due to increased economic activity. Therefore, the correct choice is C. Options A and B are not relevant as they refer to movements along the same curve, whereas the question asks about a shift in the curve. Option D is also incorrect as it does not accurately represent the shift in demand for money due to an increase in GDP.

Exhibit 14-1 -Refer to the Graph in the Exhibit.Suppose There Is an Exhibit.Suppose