An increase in the price level leads to ________ in the demand for money and an increase in real GDP leads to ________ in the demand for money.
A) an increase; an increase
B) an increase; a decrease
C) an decrease; a increase
D) a decrease; a decrease
E) no change; an increase

Question

Quizplus · Accepted Answer

An increase in the price level raises the demand for money because people need more money to buy the same goods and services. Similarly, an increase in real GDP increases the demand for money as more transactions occur in the economy.

An Increase in the Price Level Leads to ________ in the Demand