Keynesian picture the aggregate demand curve as rather __________, partly because interest rates may be __________ to changes in the real money supply.
A) flat; highly responsive
B) flat; quite unresponsive
C) steep; highly responsive
D) steep; quite unresponsive

Question

Quizplus · Accepted Answer

Keynesian economists tend to view the aggregate demand curve as steep, meaning that changes in aggregate demand will result in relatively large changes in real GDP. This is partly because they believe that interest rates are relatively unresponsive to changes in the real money supply, which means that changes in monetary policy are less effective at influencing aggregate demand than changes in fiscal policy.

Keynesian Picture the Aggregate Demand Curve as Rather __________, Partly