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If money demand shifts right, the price level falls. Select one: True or False

If money demand shifts right, the price level falls.

Select one: True or False

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Answer #1

True

Money demand refers to the real demand for holding financial assets in hand by an individual.

The price of money is generally referred to as Interest Rate.

There exists an inverse relationship between price (interest rate) and demand for money.

A rightward shift in the money demand creates higher output level. Higher money demand creates downward pressure on the price level as people would be having more purchasing power in their hands to buy goods and services.

So, the statement is TRUE

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