In the Keynesian transmission process what follows after an increase in the money supply has caused a fall in the interest rate?

Question

Quizplus · Accepted Answer

According to the Keynesian transmission process, an increase in the money supply leads to a fall in the interest rate. The lower interest rate stimulates investment spending, which leads to an increase in aggregate demand and ultimately an increase in GDP. Therefore, the correct answer is C - investment spending rises.

In the Keynesian Transmission Process What Follows After an Increase