Question

Suppose that the economy enters a recession and real GDP falls we would expect * the money demand curve to shift to the left. the money demand curve to shift to the right. an upward movement along a fixed money demand curve. a downward movement along a fixed money demand curve. no impact on the money demand curve.

Answer 1

the money demand curve to shift to the right

Step-by-step explanation:

A recession is defined as a significant reduction in economic activities that can last for months. An economy is usually said to be in recession when for two consecutive quartets there is general economic decline.

Demand for money increases (shift to the right) when the level of output decreases. In recession people earn less so there is increased demand for money to meet their needs.

Supply of money is low. Demand for goods goes down because there is not enough money in circulation to buy them.