What are main factors determining the aggregate money demand, International Economics

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Q. What are the main factors determining the aggregate money demand?

Answer: Three major factors: the price level, interest rate and real national income. A increase in the interest rate causes each individual in the economy to reduce her demand for money. If the price level increases, individual firms and households will spend more money than before. When actual national income (GNP) raises the demand for money will rise.

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