The demand for money varies
A) directly with both the price level and the level of real GDP.
B) inversely with both the price level and the level of real GDP.
C) inversely with the price level and directly with the level of real GDP.
D) directly with the price level and inversely with the level of real GDP.
E) inversely with the level of nominal GDP.

Question

Quizplus · Accepted Answer

The demand for money typically increases with higher price levels and higher real GDP because more money is needed for transactions as prices rise and economic activity increases.

The Demand for Money Varies