Question

Suppose a typical basket of goods is now more expensive than it used to be. all else equal, we would expect:_________

Answer 1

Suppose a typical basket of goods is now more expensive than it used to be. all else equal, we would expect:the demand for money to shift outward.

in economic term we called INFLATION, when the price of a basket of goods increases for a certain period of time as compared to the earlier price used to be.

here when we say the demand for money to shift outward then that would mean demand had increased. But if the curve shifted inward, that would mean there was a decrease in demand

Suppose that the economy enters a recession and real GDP falls. All else equal, here the curve will shift inward. that means the demand for money has decreased.

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