In the short run increase in the growth rate of the quantity of money decreases the nominal interest rate and in the long run it increases the nominal interest rate.
Explanation:
When there is increase in the growth rate of money supply people also start spending more.
When the nominal rate that is the interest rate decreases people demand for more money as a result the demand curve for money shifts towards its right and on the other hand when the nominal rates increases the demand for money falls and people starts saving the money as a result the demand curve for money moves towards left.
Answer:
ExplanatioIn the short run increase in the growth rate of the quantity of money decreases the nominal interest rate and in the long run it increases the nominal interest rate.
Explanation:
When there is increase in the growth rate of money supply people also start spending more.
When the nominal rate that is the interest rate decreases people demand for more money as a result the demand curve for money shifts towards its right and on the other hand when the nominal rates increases the demand for money falls and people starts saving the money as a result the demand curve for money moves towards left.
