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23 May, 10:22

If the price level decreases,

A. The money demand curve shifts to the left

B. There is a movement down along a stationary money demand curve

C. The money demand curve shifts to the right.

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Answers (1)
  1. 23 May, 10:48
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    B. There is a movement down along a stationary money demand curve

    Explanation:

    Whenever the price level changes there is movement down or up along a stationary money demand curve, in this case because the price level is decreasing there will be a movement down because the demand curve is downward sloping and when price decreases more quantity is demanded so the movement is downwards.

    Option A and C are wrong because change in price levels cannot cause the curve to shift right or left. Whenever the curves shift to the right or left it is because of non price reasons.
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