If the money supply is constant when both nominal and real GDP are rising, we can conclude that
A) tax rates have been increased.
B) the velocity of money must be increasing.
C) interest rates are falling.
D) the unemployment rate is rising.

Question

Quizplus · Accepted Answer

If both nominal and real GDP are rising and the money supply is constant, it means that there is an increase in the velocity of money. This indicates that people are spending money faster, which is contributing to the increase in GDP. A, C, and D are not necessarily related to changes in the money supply or GDP.

If the Money Supply Is Constant When Both Nominal and Real