Question

An increase in government spending will affect the demand for money and

nominal interest rates in which of the following ways? Demand for Money!
Nominal Interest Rates
Increase / Increase
Increase / Decrease
Increase / Indeterminate
Decrease / Increase
Decrease/Decrease

Answer 1

Increase / Increase

Step-by-step explanation:

An increase in government spending will affect the demand for money and nominal interest rates by increasing the demand for Money and increasing the nominal Interest rates.

This is because, with an increased budget, there will be an increase in interest rates by financial institutions.