As a person's wealth increases we would expect the demand for money to:

Question

Quizplus · Accepted Answer

The demand for money is not only determined by income but also by wealth. As wealth increases, the demand for money also increases because people want to hold a portion of their wealth in liquid form for unexpected expenses, emergencies, and other transactions. However, the increase in demand for money may not be dollar for dollar with wealth but at a rate less than dollar for dollar. This is because as people become wealthier, they tend to save and invest more, and their proportion of spending on goods and services decreases. Thus, the demand for money may not increase at the same rate as wealth, but it will still increase.

As a Person's Wealth Increases We Would Expect the Demand