An increase in nominal GDP (with inflexible prices) results in:
A) an increase in the nominal rate of interest.
B) an increase in the U.S. dollar exchange rate.
C) a decrease in the nominal rate of interest.
D) increased price and wage flexibility.

Question

Quizplus · Accepted Answer

An increase in nominal GDP, with inflexible prices, typically leads to higher demand for money, which can result in an increase in the nominal rate of interest as the supply of money remains unchanged.

An Increase in Nominal GDP (With Inflexible Prices) Results In