In a dynamic model of money, if money supply and trend output is constant over time
A)nominal supply of money will increase, while nominal demand for money will be constant.
B)nominal supply of money will decrease, while nominal demand for money will be constant.
C)nominal supply of money will be constant, while nominal demand for money will decrease.
D)both the nominal supply of money and nominal demand for money will be constant.

Question

Quizplus · Accepted Answer

In a dynamic model of money, if the money supply and trend output are constant over time, then the nominal supply of money and nominal demand for money will both be constant. This is because when there is no change in the money supply or output, there is no need for a change in the demand for money. Therefore, both nominal supply and nominal demand for money will remain constant in this scenario.

In a Dynamic Model of Money, If Money Supply and Trend