Everything else remaining the same, an increase in real GDP
A)does not change the demand for real money.
B)increases the demand for real money.
C)decreases the demand for real money.
D)increases the demand for real money up to a point, and then demand will automatically fall.
E)decreases the demand for real money up to a point, and then demand will automatically rise.

Question

Quizplus · Accepted Answer

As real GDP increases, so does income, leading to an increase in the demand for money. People and firms demand more money to conduct transactions that arise from increased production and economic activity.

Everything Else Remaining the Same, an Increase in Real GDP