The demand for real money balances is generally assumed to:

The demand for real money balances is positively related to real income, meaning that as real income increases, the demand for money balances also tends to increase. This relationship can be attributed to several factors, primarily the transactions motive and the precautionary motive for holding money.

As individuals and businesses experience higher levels of income, they engage in more transactions that necessitate holding larger amounts of money. Additionally, people might wish to maintain a greater buffer of liquid assets to cover unexpected expenses, further contributing to the demand for real money balances. Therefore, the demand for real money balances grows in correspondence with an increase in real income, making the correct answer an accurate reflection of this economic principle.