In the Keynesian model,and expected increase in the interest rate
A)increases the demand for bonds and the demand for money.
B)increases the demand for bonds and the demand for stocks.
C)decreases the demand for bonds and increases the demand for money.
D)increases the demand for bonds and decreases the demand for money.

Question

Quizplus · Accepted Answer

In the Keynesian model, an expected increase in the interest rate decreases the demand for bonds as investors anticipate higher returns from bonds in the future. This, in turn, increases the demand for money as the opportunity cost of holding money instead of bonds decreases.

In the Keynesian Model,and Expected Increase in the Interest Rate