An Increase in Real GDP Affects the Demand for Money

question 65

Multiple Choice

An increase in real GDP affects the demand for money because

• A)when real GDP increases, more money is needed to make expenditures.
• B)there is an inverse relationship between the quantity money demanded and nominal GDP.
• C)at the higher price level, it takes more dollars to make expenditures.
• D)the larger real GDP, the higher the real interest rate.
• E)tax payments rise because more income is earned.

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