Other things being equal, an increase in the nominal money stock:
A) increases the stock of real balances.
B) lowers the interest rate and increases expenditures.
C) shifts the aggregate demand curve to the right.
D) all of the above.

Question

Quizplus · Accepted Answer

An increase in the nominal money stock, assuming price levels initially remain constant, increases the stock of real balances (A), which typically lowers interest rates due to the increased supply of money, thereby encouraging borrowing and spending (B). This increase in spending shifts the aggregate demand curve to the right (C), reflecting an increase in the total demand for goods and services in the economy.

Other Things Being Equal, an Increase in the Nominal Money