If both nominal and real GDP are increasing when the money supply is constant, than we can conclude that

Question

Quizplus · Accepted Answer

If both nominal and real GDP are increasing while the money supply is constant, it implies that the velocity of money has increased. Velocity of money represents how quickly money is changing hands in the economy. Therefore, option A is correct. Option B, C, and D are incorrect as they do not explain the situation where nominal and real GDP are increasing despite a constant money supply.

If Both Nominal and Real GDP Are Increasing When the Money