Which of the following,other things constant,will shift the money demand curve to the right?
A)an increase in the interest rate
B)a decrease in the interest rate
C)an increase in real GDP
D)a decrease in real GDP
E)a decrease in the price level

Question

Quizplus · Accepted Answer

An increase in real GDP will lead to an increase in income, which will result in an increase in the demand for money as people will want to hold more money (liquidity) to finance their increased level of spending. This will shift the money demand curve to the right.

Which of the Following,other Things Constant,will Shift the Money Demand