Assume Nominal GDP = PY, and =

Multiple Choice

Assume nominal GDP = PY, and = the proportion of nominal income that the nation holds (demands) as money to cover its transactions. Because nominal money supply equals nominal money demand, then:

A) increases in nominal income cause an increase in the money supply.
B) decreases in nominal income cause an increase in the money supply.
C) price increases cause an increase in the money supply.
D) an increase in the money supply causes a proportional increase in nominal income.