Question

An economy begins in long-run equilibrium, and then a change in government regulations makes holding money less attractive. a. (1.5 points) How does this change affect the demand for money

Answer 1

Answer: Demand Curve shifts left

Step-by-step explanation:

Money is now less attractive to hold so people will demand less of it. This will cause the demand curve in the monetary market therefore to shift to the left.

Shifts in the demand curve for money are usually caused when a non-interest determinant of demand changes such as a decrease in income.