If the nominal interest rate increases, the demand for money will ________ and the velocity of money will ________.

Name: If the nominal interest rate increases, the demand for money will ________ and the velocity of money will ________.
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Question

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When the nominal interest rate increases, the cost of holding money increases, leading individuals to hold less money (decrease in demand for money) and to transact more quickly with the money they do hold (increase in the velocity of money).

If the Nominal Interest Rate Increases, the Demand for Money