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Factors that Cause Demand to Shift
A demand curve has the price on the vertical axis (y) and the quantity on the horizontal axis (x). The shift of the money demand curve occurs when there is a change in any non-price determinant of demand, resulting in a new demand curve. Non-price determinants are changes cause demand to change even if prices remain the same. Factors that influence prices include:
Changes in disposable income
Changes in tastes and preferences
Changes in expectations
Changes in price of related goods
Population size
Factors that change the demand include:
Decrease in the price of a substitute
Increase in the price of a complement
Decrease in consumer income if the good is a normal good
Increase in consumer income if the good is an inferior good
The demand for money shifts out when the nominal level of output increases. It shifts in with the nominal interest rate.
steve williams answered the question on January 23, 2018 at 10:36
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