Refer to the information provided in Figure 11.2 below to answer the questions that follow.
Figure 11.2
-Refer to Figure 11.2.Suppose that money demand is currently at Point B.A movement to Point D could be caused by

Question

Refer to the information provided in Figure 11.2 below to answer the questions that follow.
  Figure 11.2
-Refer to Figure 11.2.Suppose that money demand is currently at Point B.A movement to Point D could be caused by

Quizplus · Accepted Answer

A movement from Point B to Point D on the money demand curve implies a decrease in the quantity of money demanded at each interest rate. This can be caused by a decrease in the interest rate, ceteris paribus, which reduces the opportunity cost of holding money and hence increases the quantity of money demanded at each interest rate level. Therefore, D is the correct choice. A, B, and C are incorrect because an increase in income, an increase in the price level, or a decrease in the price level, ceteris paribus, do not directly affect the quantity of money demanded at each interest rate level.

Refer to the Information Provided in Figure 11