How does an increase in household income affect the money market in the short run?

When household income increases, people generally have more money to spend, which affects the money market. In the short run, this rise in income leads to an increase in the demand for money because people want to buy more goods and services. For example, if a family gets a raise, they may want to purchase a new car or go on vacation, requiring them to hold more cash for these expenses. As demand for money increases, it can lead to higher interest rates if the supply of money does not change. This happens because banks may not have enough money to lend out at the same low rates if more people are trying to borrow.