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12. A 30 percent increase in the aggregate price level will: O increase money demand by 30 percent. O increase money demand by the money multiplier. O decrease money demand by 30 percent. O not affect the demand for money
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Answer #1

An increase in the aggregate price level ? Decrease of real cash . So, banks will have lesser money to lend, thereby interest rate increases . Now, as we know that money demand is negatively sloped with respect to interest rate on y axis and qt. of money on x-axis, therefore an increase in interest rate will decrease the money demand by 30%.

So, option c is correct!

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