Other things equal, if there is an increase in nominal GDP,
A) the demand for money will decrease.
B) the interest rate will rise.
C) bond prices will rise.
D) consumption spending will fall.

Question

Quizplus · Accepted Answer

An increase in nominal GDP would typically lead to an increase in the demand for money. This would put upward pressure on interest rates in order to equate the quantity of money demanded with the quantity of money supplied. Therefore, B is the correct answer. C is incorrect because an increase in bond prices would generally be associated with a decrease in interest rates. D is also incorrect, as an increase in nominal GDP would typically lead to an increase in consumption spending, since income is a key determinant of consumption.

Other Things Equal, If There Is an Increase in Nominal