The demand for money will__when the price level__

A. increases; falls

B. increases: rises

C. remain constant; rises

D. remain constant; falls

B. increases: rises

Explanation:

Demand for money increases as the prices rise.

Demand for money is the desire by businesses and individuals to have cash for spending it as opposed to investing or for saving. Money is an asset. We use asset money to acquire other assets or get services.

People will demand money, either for transactions, for speculations, or precaution. These are the motives for demanding cash. The transaction motive arises because people need money to buy goods and services.

As prices increase, people will demand more money to make transactions. Therefore an increase in prices leads to a rise in demand for cash.