If real GDP stays the same but the price level increases:

Question

Quizplus · Accepted Answer

When the price level increases, nominal GDP (measured in current prices) increases as well. This means that individuals and businesses will require more money to conduct the same amount of transactions, leading to an increase in nominal money demand. Real money demand, which is adjusted for changes in the price level, would remain the same if real GDP stays constant. However, the question asks about nominal money demand, which would increase.

If Real GDP Stays the Same but the Price Level