According to Keynesians,an increase in the money supply will:

Question

Quizplus · Accepted Answer

Keynesians argue that an increase in the money supply will lower interest rates, making borrowing cheaper and encouraging investment. This, in turn, will increase aggregate demand and prices, leading to an increase in real GDP and employment. Therefore, option A is the correct answer. Option B is not correct since low interest rates will stimulate investment and aggregate demand. Option C is incorrect because an increase in the money supply will lead to lower interest rates, which will increase investment and aggregate demand. Option D is incorrect since an increase in the money supply will affect not only prices but also other macroeconomic variables. Option E is partially correct since an increase in the money supply will lead to lower investment, but it will also increase aggregate demand, prices, nominal GDP, and employment.

According to Keynesians,an Increase in the Money Supply Will