if there is an increase in aggregate demand, what happens in the money market? choose 1 answer: a the demand…

if there is an increase in aggregate demand, what happens in the money market? choose 1 answer: a the demand for money decreases and nominal interest rates decrease. b the demand for money increases and nominal interest rates increase. c the market for money is unaffected. d the supply of money decreases and nominal interest rates increase. e the supply of money increases and nominal interest rates decrease.

if there is an increase in aggregate demand, what happens in the money market? choose 1 answer: a the demand for money decreases and nominal interest rates decrease. b the demand for money increases and nominal interest rates increase. c the market for money is unaffected. d the supply of money decreases and nominal interest rates increase. e the supply of money increases and nominal interest rates decrease.

Answer

Brief Explanations:

When aggregate demand increases, people need more money for transactions. This raises the demand for money. In the money - market, with a fixed money supply in the short - run, an increase in money demand causes the nominal interest rate to rise as lenders can charge higher rates due to the increased demand for borrowing.

Answer:

B. The demand for money increases and nominal interest rates increase.