# Increase In Nominal Income Without Increase In Money Supply

I couldn't understand the logic behind the increase in nominal income without changing the money supply, which I confronted with when I was studying financial markets on the relationship between money and interest rate which is:

$$Ms=Md$$ (In equilibrium condition)

$$Md=Y*L(i) (-)$$ How can a country increase its nominal income without money supply? Because If the marginal propensity to consume is 1, which means all disposable income will be spent by consumers (if we consider some of the least developed countries), therefore the demand curve for money would not shift because there wouldn't be any increase in nominal income except by increase in money supply due to all income is spent on consumption.

• the graph does look like its plots increase in nominal income, would you care to clarify what you mean? Y is real income not nominal income
– 1muflon1
Mar 26 at 19:26
• In the page 92 of book Macroeconomics written by Olivier Blanchard it says "For a given money supply, an increase in nominal income leads to an increase in the interest rate. The reason: At the initial interest rate, the demand for money exceeds the supply. The increase in the intererst rate decreases the amount of money people want to hold and reestablishes equilibrium." Did I get wrong? Mar 26 at 19:31
• okay that clarifies it
– 1muflon1
Mar 26 at 20:58