A rise in real income will have which of the following effects on money demand?
A) The money demand curve will shift out.
B) The money demand curve will not shift at all.
C) The money demand curve will shift in.
D) Real income has no effect on money demand.

Question

Quizplus · Accepted Answer

When real income rises, people have more purchasing power and tend to spend more, which increases the demand for money to make these purchases. Therefore, the money demand curve shifts out.

A Rise in Real Income Will Have Which of the Following