Figure 104

-Refer to Figure 10 $\hat{Y}$ ₁,And Real GDP Increases So the C

Multiple Choice

Figure 10.4

-Refer to Figure 10.4..Suppose the economy's equilibrium starts out with an output gap of $\hat{Y}$ ₁,and real GDP increases so the C $\hat{Y}$ ₂.If the Bank of Canada keeps the money supply constant,money demand will ________ and the nominal interest rate will ________.

A) increase; increase
B) increase; decrease
C) increase; remain constant
D) remain constant; remain constant