The demand curve for money shifts to the right when:

• A. the price level falls
• B. the interest rate decreases
• C. the supply of money decreases
• D. income in the economy increases

Answer: (D)

Verified step by step guidance

1. Understand that the demand for money in microeconomics typically depends on factors such as the price level, interest rates, and income in the economy.
2. Recall that the demand for money curve shifts to the right when people want to hold more money at every interest rate, which usually happens when their income increases because they engage in more transactions.
3. Analyze each option: a fall in the price level generally reduces the demand for money since goods become cheaper; a decrease in interest rates lowers the opportunity cost of holding money, which can increase demand; a decrease in the supply of money does not shift the demand curve but affects equilibrium.
4. Recognize that an increase in income leads to higher transaction needs, causing the demand for money curve to shift rightward, reflecting greater money demand at each interest rate.
5. Conclude that among the given options, the correct cause for a rightward shift in the money demand curve is an increase in income in the economy.