According to Keynesians, an increase in the money supply will:
A) decrease the interest rate, and increase investment, aggregate demand, prices, real GDP, and employment.
B) decrease the interest rate, and decrease investment, aggregate demand, prices, real GDP, and employment.
C) increase the interest rate, and decrease investment, aggregate demand, prices, real GDP, and employment.
D) only increases prices.

Question

Quizplus · Accepted Answer

According to Keynesians, an increase in the money supply will decrease the interest rate, making it cheaper for individuals and firms to borrow money. This will lead to an increase in investment, which will in turn increase aggregate demand, prices, real GDP, and employment.

According to Keynesians, an Increase in the Money Supply Will