Select an answer which correctly completes the following statements. rightward s

Question

Select an answer which correctly completes the following statements. rightward shift of leftward shift of movement along decrease in real GDP causes al Select answer Fl the money demand curve. 2. An increase in technology which makes it easier to pay for goods and services without carrying lots of cash causes al select answer the money demand curve. 3. A decrease in interest rates causes a Select answer 'tithe money demand curve. 4. An increase in the aggregate price level causes a Select answer the money demand curve.

Explanation / Answer

a. Decrease in GDP will cause left shift in demand curve becuase of at lower national income lower will be transaction demand for money.

Leftwards

b.

Increase in technology which decreases the requirement to carry cash will decrease the money demand curve like ATM.

Leftward

c.

Decrease in interest rate will increase the speculative demand for money, as a result money demand will increase.

along the money demand curve.

d.

Money demand curve is plotted assuming the price to be constant. If aggregate price increases, real value of money will fall, so people have to carry more money to purchase same amount of goods.

Rightward shift.

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