According to the Keynesian view of the demand for money, an increase in uncertainty will cause
A) a decrease in interest rates.
B) an increase in interest rates.
C) an increase in aggregate income.
D) an increase in consumption.

Question

Quizplus · Accepted Answer

According to the Keynesian view, an increase in uncertainty will cause an increase in the demand for money as individuals and firms will want to hold more money as a precaution. This increased demand will lead to an increase in interest rates, as lenders will demand higher rates to lend out their money.

According to the Keynesian View of the Demand for Money