An increase in the opportunity cost of holding money creates a ________ the money demand curve and an increase in real GDP creates a ________ the money demand curve.

Question

Quizplus · Accepted Answer

An increase in the opportunity cost of holding money (such as higher interest rates) leads to a movement up along the money demand curve, as people hold less money. An increase in real GDP increases the demand for money, causing a rightward shift of the money demand curve.

An Increase in the Opportunity Cost of Holding Money Creates