Supply of money remaining the same when there is an increase in demand for money, there will be

Work it out from the money market. Money supply is fixed, so the supply curve is vertical. When demand for money rises (people want more cash for transactions, precaution or speculation), the demand curve shifts right and the equilibrium interest rate, which is the price of money, rises. This is Keynes's liquidity preference logic: interest is the reward for parting with liquidity.

• A is wrong: a higher demand for money with unchanged supply does not by itself lower prices. Price-level movements are tied to changes in money supply relative to output, not to a shift in money demand.
• C is wrong: it moves in the opposite direction to what the shift implies.
• D is wrong: higher interest rates tend to dampen investment and income in the short run, so employment does not rise automatically from a money demand shift.

Mains connection: this is the transmission logic behind RBI's repo rate decisions and why tight liquidity raises borrowing costs for MSMEs. The RBI now follows a flexible inflation targeting framework under the 2016 agreement with the government, which changes how policy signals are set, but the basic market logic remains the same.

Trap: candidates confuse demand for money with demand for goods and pick the price-level option, forgetting that money is the good being priced here.