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Consider the following statements about the demand of money
1. An increase in nominal GDP implies an increase in the total value of transactions.
2. Increase in nominal GDP implies a lower transaction demand for money.
3. Transaction demand for money is positively related to the real income of an economy add deflator.
Which of statements given above is/are not correct?
1 and 3 only
2 only
1, 2 and 3
3 only
An increase in nominal GDP implies an increase in the total value of transactions and hence a greater transaction demand for money.
• Transaction demand for money is positively related to the real income of an economy and also to its average price level. Increase in nominal GDP implies a higher transaction demand for money.
By: Kritika Kaushal ProfileResourcesReport error
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