If the money supply is held constant as both real and nominal GDP are rising.
A)the velocity of money will rise.
B)the velocity of money will fall.
C)interest rates will rise.
D)both (a) and (c)

Question

If the money supply is held constant as both real and nominal GDP are rising.
A)​the velocity of money will rise.
B)​the velocity of money will fall.
C)​interest rates will rise.
D)​both (a) and (c)

Quizplus · Accepted Answer

The velocity of money will rise because more transactions are occurring with the same amount of money, indicating money is changing hands more quickly. Interest rates are likely to rise as well due to increased demand for money relative to the fixed supply.

If the Money Supply Is Held Constant as Both Real