When the price level rises, the demand for money_{--------------------} and, as a result, the equilibrium nominal interest rate_{--------------------}. A)falls; decreases B)falls; increases C)rises; decreases D)rises; increases E)rises; probably changes, but more information is needed to determine if it rises or falls.

Question

Quizplus · Accepted Answer

When the price level rises, people need more money for transactions, increasing the demand for money, which leads to a rise in the equilibrium nominal interest rate.

When the Price Level Rises, the Demand for Money-------------------- And

When the Price Level Rises, the Demand for Money_{--------------------} And