In the short-run velocity is not constant. Which of the following variables can be affected by a change in money supply?
I. real GDP
II. nominal GDP
III. the price level

Question

In the short-run velocity is not constant. Which of the following variables can be affected by a change in money supply? 
I. real GDP
II. nominal GDP
III. the price level

Quizplus · Accepted Answer

In the short-run, changes in the money supply can affect real GDP, nominal GDP, and the price level. An increase in money supply can lead to higher nominal GDP and price levels, and potentially affect real GDP if there are underutilized resources.

In the Short-Run Velocity Is Not Constant