According to Keynes, an increase in interest rates causes _____ in velocity, ceteris paribus.
A) an increase
B) a decrease
C) no change
D) cannot be determined

Question

Quizplus · Accepted Answer

According to Keynes, an increase in interest rates leads to an increase in the velocity of money because people are more likely to hold less cash and invest or spend more quickly to take advantage of higher returns.

According to Keynes, an Increase in Interest Rates Causes _____