Final answer:
Money demand increases with higher income, as people have more money to spend and require more liquidity. On the other hand, it decreases with higher interest rates because non-liquid savings become more attractive.
Step-by-step explanation:
The two factors that can cause money demand to go up, and conversely decrease if they go down, are income and interest rates. As incomes rise, individuals have more money to spend and may demand more liquidity for transactions, which increases the demand for money. On the other hand, as interest rates rise, money held in non-liquid forms (such as savings accounts) earns more, which can reduce the demand for liquid cash. Therefore, the demand for money is positively correlated with income levels but negatively correlated with interest rates.