Question

Which of the following will cause the money demand curve to shift right from MD1 to...

Which of the following will cause the money demand curve to shift right from MD1 to MD2?

A) real GDP decreased

B) the price level increased

C) the interest rate decreased

D) the Federal Reserve sold Treasury securities

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The rightward shift of the money demand curve indicates an increase in the demand for money.

In general, when price level rises then purchasing power of money decreases. This decrease in purchasing power of money compels people to hold more money so that same standard of living can be maintained.

So, people will demand more money.

Thus, the increase in price level will cause the money demand curve to shift right from MD1 to MD2.

Hence, the correct answer is the option (B).

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Describe whether the following changes cause the aggregate demand curve to increase (shift right), decrease (shift...
Describe whether the following changes cause the aggregate demand curve to increase (shift right), decrease (shift left), or neither. (a) The price level increases. (b) Investment decreases. (c) Imports decrease and exports increase. (d) The price level decreases. (e) Consumption increases. (f) Government purchases decrease. Describe whether the following changes cause the long-run aggregate supply curve to increase (shift right), decrease (shift left), or neither. (a) The price level increases. (b) The stock of capital in the economy increases. (c)...
A decrease in the expected price level a. will cause the aggregate demand curve to shift...
A decrease in the expected price level a. will cause the aggregate demand curve to shift to the left but an increase in the actual price level does not cause shifting. b. will cause the aggregate demand curve to shift to the right but an increase in the actual price level will not cause shifting. c. will cause the aggregate demand curve to shift to the left and an increase in the actual price level will also cause shifting to...
In which direction will the transaction demand for money curve shift? Right when interest rate increases....
In which direction will the transaction demand for money curve shift? Right when interest rate increases. Right when nominal GDP increases. Left when nominal GDP increases. Left when the interest rate decreases. Right when nominal GDP decreases.
An increase in the price level causes A. the money demand curve to shift to the...
An increase in the price level causes A. the money demand curve to shift to the right. B. the money demand curve to shift to the left. C. a movement up along the money demand curve. D. a movement down along the money demand curve.
Which of the following will cause the aggregate demand curve to shift to the left? A....
Which of the following will cause the aggregate demand curve to shift to the left? A.   A decrease in consumer and business confidence because of a terrorist attack. B. A decrease in the interest rate. C. A decrease in business taxes. D. An improvement in technology.
Which of the following actions would cause an increase to the money supply? A. The New...
Which of the following actions would cause an increase to the money supply? A. The New York Fed trading desk sells Treasury securities in the secondary market. B. The Federal Reserve Board of Governors raises the discount rate. C. The New York Fed trading desk purchases Treasury securities in the secondary market. D. The Federal Reserve Board of Governors raises the reserve requirements. E. both (C) and (D).
Favorable weather    a.    would cause the AS curve to shift leftward, thereby increasing both...
Favorable weather    a.    would cause the AS curve to shift leftward, thereby increasing both output and the price level    b.    would increase firms’ unit costs    c.    is an example of a negative supply shock    d.    is an example of a positive demand shock    e.    would lead to an increase in output and a decrease in the price level A negative supply shock    a.    decreases real GDP and increases...
Which of the following will cause a movement along the demand curve instead of a shift...
Which of the following will cause a movement along the demand curve instead of a shift of the demand? curve? A. Income B. Expectations of the future price of a good C. Tastes and preferences D. none of the above
Which of the following would cause a shift to the left of the demand curve for...
Which of the following would cause a shift to the left of the demand curve for glow-in-the-dark clothing in Antarctica? A. penguins go extinct B. the price of normal clothing increases C. summer begins D. the population of Antarctica increases
1. The aggregate demand would shift to the right if: a. the money supply increases. b....
1. The aggregate demand would shift to the right if: a. the money supply increases. b. the Cambridge “k” increases. c. an increase in government spending is 100% offset by a decrease in consumer spending. d. foreign sector spending falls. e. All of the above. 2. The short run aggregate supply is viewed as upward sloping: a. showing that higher prices will lead to higher production. b. because it takes a while for wages to rise when prices rise. c....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT