Which of the following statements is true?
A) The quantity of money demanded varies directly with the nominal rate of interest.
B) Money market equilibrium occurs at the nominal interest rate where the aggregate demand equals the quantity of money supplied
C) Rising national income will decrease the demand for money, leading to a new higher equilibrium nominal interest rate in the short run
D) Rising national income will increase the demand for money, leading to a new lower equilibrium real interest rate in the short run.
E) Rising national income will shift the money demand curve to the right, leading to a new higher equilibrium nominal interest rate in the short run.
Correct Answer:
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