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an increase in the demand for money would cause select an answer and submit. for keyboard navigation, use the up/down arrow keys to select an answer. a a fall in bond prices, an increase in interest rates, and an increase in the supply of money. b a rise in bond prices, an increase in interest rates, and no change in the money supply. c a fall in bond prices, an increase in interest rates, and an increase in the quantity supplied of money. d a fall in bond prices, an increase in interest rates and no change the supply of money.

Sagot :

An increase in demand for money would cause a fall in bond prices, an increase in interest rates, and an increase in the supply of money.

Option A is correct.

An increase in money demand results from (C) a fall in the price level. Consumers tend to buy more when prices drop, so they need more money.

What happens when the demand for money increases?

As the demand for money increases, the demand curve for money shifts to the right, leading to higher nominal interest rates. Conversely, when the demand for money decreases, the demand curve for money shifts to the left and interest rates fall.

How does money demand affect economic growth?

The higher the trading level, the higher the demand for real money balances. Quantitative theory of money demand postulates a one-to-one relationship between money demand and income. Demand for real currency is also affected by Gross Domestic Income (GDP) growth. A rise in GDP will lead to an increase in consumer spending.

Learn more about demand for money :

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