Suppose that we are at a point on the money demand schedule where (M/P)= 500.At a constant interest rate,the quantity of money demanded increases when real income ________ so that ________.
A)rises,the money demand schedule shifts to the right
B)rises,the money demand schedule shifts to the left
C)rises,we move downward along the money demand schedule
D)falls,the money demand schedule shifts to the left
E)falls,we move upward along the money demand schedule

Question

Quizplus · Accepted Answer

When real income rises, people demand more money for transactions, leading to a rightward shift in the money demand schedule.

Suppose That We Are at a Point on the Money