[Note: The distance between cities in California (US) distance chart below is straight line distance (may be called as flying or air distance) between the two locations in California (US) calculated based on their latitudes and longitudes. This distance may be very much different from the actual travel distance.]
In drawing the demand schedule or the demand curve for a good we take income of the people as given and constant. When as a result of the rise in the income of the people, the demand increases, the whole of the demand curve shifts upward and vice versa. The greater income means the greater purchasing power.
But if the increase in the supply exceeds the increase in demand, the interest rate falls. Short-Run Effects of Money on Real GDP and the Price Level 15. T Higher interest rates ripple through the econ-omy, affecting many sectors.63 11 MONEY, INTEREST, REAL GDP, AND THE PRICE LEVEL* Key Concepts The Demand for Money Four factors influence the demand for money: â¦ The price level â An increase in the price level in-creases the nominal demand for money.