Refer to the information provided in Figure 10.2 below to answer the questions that follow. Figure 10.2
-Refer to Figure 10.2. Suppose that money demand is currently at Point B. A movement to Point D could be caused by
A) an increase in nominal income, ceteris paribus.
B) an increase in the price level, ceteris paribus.
C) a decrease in the price level, ceteris paribus.
D) a decrease in the interest rate, ceteris paribus.

Question

Refer to the information provided in Figure 10.2 below to answer the questions that follow.  Figure 10.2
-Refer to Figure 10.2. Suppose that money demand is currently at Point B. A movement to Point D could be caused by
A) an increase in nominal income, ceteris paribus. 
B) an increase in the price level, ceteris paribus. 
C) a decrease in the price level, ceteris paribus. 
D) a decrease in the interest rate, ceteris paribus.

Quizplus · Accepted Answer

According to the graph, a decrease in the interest rate leads to an increase in money demand, which would result in a movement from Point B to Point D. Therefore, option D is the correct choice. A, B, and C are incorrect as they do not lead to a movement from Point B to Point D.

Refer to the Information Provided in Figure 10