Respuesta :
Answer:
A decrease in real GDP causes a decrease in the money demand curve. A decrease in interest rates causes an increase in the money demand curve. An increase in the aggregate price level causes an increase in the money demand curve.
Explanation:
A demand curve is a graphical representation of the demand for money. Highlighting the demand for money in relation to price.
If real GDP increases, it will increase the need to have money to purchase goods, as there is already an increase in goods produced or available in the market. The need to have more money to purchase the more goods available in the market will drop once real GDP drops.
When the quantity of money demanded increases, it affects the price as well, as price increases, causing an increase in the demand curve. Talking about interest rates, a decrease in the interest rate will lead to an increase in the quantity of money demanded which will lead to an increase in the money demand curve.
The aggregate price level measures the entire prices in the economy. It gives a quick view of how the market pricing system is.
When the price level is high, an individual will have to spend more meaning there will be an increase in the demand for money to purchase the desired goods leading to a direct increase in the money demand curve.
A decrease in real GDP causes a leftward shift in the money demand curve. A decrease in interest rates causes a rightward shift in the money demand curve. An increase in the aggregate price level causes a rightward shift in the money demand curve.
What is the money demand curve?
The money demand curve illustrates the demand for money at a given interest rate. It is a downward-sloping curve that means there is an inverse relationship between demand for money and the interest rate.
The shift in money demand curve:
The money demand curve shifts to the right as the demand for money increases and it shifts to the left as demand decreases.
The demand for money will increase due to a rise in real GDP, a fall in interest rate, an increase in the price level, a change in expectations, and similar reasons.
The demand for money will decrease due to inverse change in the above factors.
Therefore, the answers to the blanks are:
leftward shift,
rightward shift, and
rightward shift.
Learn more about the money demand curve here:
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