Refer to the above information.All else equal, the transaction demand for money in this table would increase if:
A)nominal GDP increased.
B)the interest rate fell.
C)the supply of money increased.
D)the supply of money decreased.

Question

Refer to the above information.All else equal, the transaction demand for money in this table would increase if:
A)nominal GDP increased. 
B)the interest rate fell. 
C)the supply of money increased. 
D)the supply of money decreased.

Quizplus · Accepted Answer

According to the quantity theory of money, the transaction demand for money is directly related to nominal GDP. So, if nominal GDP increases, the transaction demand for money will also increase.

Refer to the Above Information