reases whilst the demand for money is still stable. People will now find themselves holding excess money balances, because the money supply is greater t han 25% GDP: the supply of money has become greater than the demand for money, and V is less than 4. People will try to reduce their money holdings by spending on goods and services. The effect of this increased expenditure is to increase GDP. This process shows that, for a stable V, any increase in the money supply brings about an increase in the demand for goods and services
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