Suppose the money supply and the price level are constant, and the demand for money is a function of income and interest rate. When the income level increases, there is
A. an increase in the quantity of money demanded and an increase in the rate of interest.
B. an increase in the quantity of money demanded and a decrease in the rate of interest.
C. a decrease in the quantity of money demanded and a decrease in the rate of interest.
D. a decrease in the quantity of money demanded and an increase in the rate of interest.
Answer:A
Suppose the money supply and the price level are constant, and the demand for money is a function of income and interest rate. When the income level increases, there is
A. an increase in the quantity of money demanded and an increase in the rate of interest. B. an increase in the quantity of money demanded and a decrease in the rate of interest. C. a decrease in the quantity of money demanded and a decrease in the rate of interest. D. a decrease in the quantity of money demanded and an increase in the rate of interest.