An Increase in Nominal GDP Increases the Demand for Money

question 10

Multiple Choice

An increase in nominal GDP increases the demand for money because

• A)interest rates will rise.
• B)more money is needed to finance a larger volume of transactions.
• C)bond prices will fall.
• D)the opportunity cost of holding money will decline.

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Definitions:

Erythrocytes

Erythrocytes are red blood cells responsible for carrying oxygen from the lungs to the body tissues and carbon dioxide as a waste product, away from the tissues and back to the lungs.

General Adaptation Syndrome

A framework that outlines how the body responds to stress over both immediate and extended periods, identified by three phases: alarm, resistance, and exhaustion.

Endocrine Activity

The function of glands that secrete hormones directly into the bloodstream to regulate various bodily processes.

Resistance Stage

The second phase of the stress response, where the body tries to adapt to the stressor.