What happens to the Purchasing Power of Money, Prices and the Nominal Rate of Interest in CASE 1: the case of an increasing supply of money and credit? CASE 2: the case of a decreasing supply of money and credit? CASE 3: the case of an increasing demand for money and credit? CASE 4: the case of a decreasing demand for money and credit?

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Munali Munali · Answer 1 · 2020-08-08T10:01:31+02:00

Answer:

Case 1: The purchasing power of money will decrease, prices will increase and nominal interest rate will decrease.

Case 2: The purchasing power of money will increase, prices will decrease and nominal interest rate will increase.

Case 3: The purchasing power of money will increase, prices will decrease and nominal interest rate will increase.

Case 4: The purchasing power of money will decrease, prices will increase and nominal interest rate will decrease.

Explanation:

Case 1: The purchasing power of money will decrease, prices will increase and nominal interest rate will decrease.

Case 2: The purchasing power of money will increase, prices will decrease and nominal interest rate will increase.

Case 3: The purchasing power of money will increase, prices will decrease and nominal interest rate will increase.

Case 4: The purchasing power of money will decrease, prices will increase and nominal interest rate will decrease.