Question

Suppose that a country has the money demand function: (M / P)d = Y / (5i). With constant real gross domestic product of 1,000, the velocity of money would _____ if the nominal interest rate rose from 2 percent to 2.5 percent.

Answer 1

Rise by 2.5

Step-by-step explanation:

The number of times money goes from one organization to another is the other wise known as the velocity of money.