Question

If producers believe that the economy is strong so that investment spending increases, we would expect to see:__________

a. an increase in the demand for money.
b. a decrease in the demand for money.
c. an increase in the quantity of money demanded.
d. a decrease in the quantity demanded of money.
e. no change in the demand for money.

Answer 1

Answer: c. an increase in the quantity of money demanded.

Step-by-step explanation:

If producers believe that the economy is strong they will try to capitalize on this to get more profit by expanding operations. To do so they would need some funding.

They will go to investors looking for this funding which means that there will be an increase in the quantity of money demanded in the economy as these producers seek funds to expand.