If real GDP decreases, there is
A) an upward movement along the demand for money curve and no shift of the curve.
B) a downward movement along the demand for money curve and no shift of the curve.
C) a rightward shift of the demand for money curve.
D) a leftward shift of the demand for money curve.
E) no movement along the demand for money curve and the curve does not shift.

Question

Quizplus · Accepted Answer

A decrease in real GDP leads to a decrease in income, which results in a decrease in the demand for money. Therefore, there is a leftward shift in the demand for money curve.

If Real GDP Decreases, There Is