Chapter 30
1.
2.
a. When people feel that there is a need to hold less cash, the money demand will see a
decrease. In this case, less money is demanded at any price level, which causes a shift of the
demand curve to the left.
b. May there be no response to this event made by the Fed, the event mentioned in part a) will
result in an increase in the price level while the value of money decreases, shown in the figure
below.
