A reduction in the demand for money is the equivalent of a(n) _______ in velocity and will shift the aggregate demand curve to the _____.
A) increase; right
B) increase; left
C) decrease; right
D) decrease; left

Question

Quizplus · Accepted Answer

A reduction in the demand for money means that each unit of currency is used more frequently for transactions, which is equivalent to an increase in the velocity of money. This increase in velocity can stimulate economic activity, shifting the aggregate demand curve to the right.

A Reduction in the Demand for Money Is the Equivalent