According to Keynesians,for monetary policy to have a stimulative effect on GDP,a/an:
A)increase in the money supply is needed which lowers the interest rate in order to stimulate higher levels of investment.
B)increase in the money supply is needed which lowers the interest rate in order to lower levels of investment.
C)decrease in the money supply is needed which lowers the interest rate in order to stimulate higher levels of investment
D)decrease in the money supply is needed which causes the interest rate to rise in order to stimulate higher levels of investment.
E)increase in the money supply is needed which causes the interest rate to rise in order to stimulate higher levels of investment.

Question

Quizplus · Accepted Answer

According to Keynesians, an increase in the money supply is needed to lower the interest rate, which stimulates higher levels of investment and leads to an increase in GDP. Lower interest rates make borrowing cheaper, encouraging businesses to invest in new projects and expand their operations. This increased investment leads to higher employment and economic growth.

According to Keynesians,for Monetary Policy to Have a Stimulative Effect