An increase in nominal aggregate output,ceteris paribus,will cause the demand for money to ________ and the interest rate to ________.

Question

Quizplus · Accepted Answer

An increase in nominal aggregate output means there is more money circulating in the economy, which increases the demand for money. In turn, the increased demand for money causes interest rates to increase. This relationship is known as the Money Demand Curve. Therefore, an increase in nominal aggregate output will cause the demand for money to increase, and the interest rate to increase as well.

An Increase in Nominal Aggregate Output,ceteris Paribus,will Cause the Demand