Figure 34-5. On the figure, MS represents money supply and MD represents money demand.
-Refer to Figure 34-5. A shift of the money-demand curve from MD1 to MD2 could be a result of
A) a decrease in taxes.
B) an increase in government spending.
C) an increase in the price level.
D) All of the above are correct.

Question

Figure 34-5. On the figure, MS represents money supply and MD represents money demand. 
-Refer to Figure 34-5. A shift of the money-demand curve from MD1 to MD2 could be a result of
A) a decrease in taxes. 
B) an increase in government spending. 
C) an increase in the price level. 
D) All of the above are correct.

Quizplus · Accepted Answer

An increase in government spending, a decrease in taxes, and an increase in the price level can all lead to a shift of the money-demand curve from MD1 to MD2.