Modern Keynesians believe that fiscal stimulus raises interest rates,which eliminates an AD excess.

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Modern Keynesians believe that fiscal stimulus can increase demand and potentially lead to inflation, but do not necessarily believe that it always leads to higher interest rates. In fact, some argue that in a low interest rate environment, fiscal stimulus may not significantly affect interest rates at all.

Modern Keynesians Believe That Fiscal Stimulus Raises Interest Rates,which Eliminates