Figure 15-1 -Refer to Figure 15-1.In the figure above,the money demand curve would move from Money demand₁ to Money demand₂ if A)real GDP decreased. B)the price level increased. C)the interest rate decreased. D)the Federal Reserve sold Treasury securities.

Question

Quizplus · Accepted Answer

The money demand curve shifts when there is a change in an economic factor that affects the quantity of money that people wish to hold at a given interest rate. An increase in the price level means that more money is needed to buy the same goods and services, thus increasing the demand for money. This is why the money demand curve would shift from Money demand1 to Money demand2 if the price level increased.

Figure 15-1 -Refer to Figure 15-1.In the Figure Above,the Money Demand Curve