In Which Direction Will the Transaction Demand for Money Curve

question 124

Multiple Choice

In which direction will the transaction demand for money curve shift?

• A)Right when nominal GDP increases.
• B)Left when nominal GDP increases.
• C)Right when nominal GDP decreases.
• D)Right when interest rate increases.
• E)Left when the interest rate decreases.

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Definitions:

Classical Theory

An economic theory that emphasizes the ideas that free markets can regulate themselves through the laws of supply and demand, positing minimal government intervention.

Short Run

A period in economics where at least one factor of production is fixed and cannot be varied to influence output.

Long Run

A period during which all inputs can be adjusted by firms, as opposed to the short run where some inputs are fixed.

Aggregate Demand Curve

A curve that represents the total demand for all goods and services in an economy at various price levels, typically downward sloping.