An increase in income levels typically leads to a(n) __________ in the demand for money, which can cause nominal interest rates to rise in the short run.

An increase in income levels usually leads to a higher demand for money because people need more cash to buy goods and services as they earn more. When people have more income, they tend to spend more, which means they want to hold more money for their daily transactions. This increased demand for money can outpace the supply of money available in the economy, leading to a situation where there is not enough money to meet everyone's needs. As a result, banks may raise nominal interest rates to encourage people to save money rather than spend it, which can help balance the demand and supply. For example, if a person's salary increases and they start buying more groceries and clothes, they will want to keep more cash on hand, causing an overall rise in money demand in the economy.