In the Keynesian model in the long run,an increase in the money supply will cause ________ in the real interest rate and ________ the price level.
A)an increase;an increase
B)a decrease;an increase
C)no change;an increase
D)no change;no change

Question

Quizplus · Accepted Answer

In the long run, the Keynesian model suggests that changes in the money supply do not affect real variables like the real interest rate, which remains unchanged. However, the price level increases due to the proportional increase in the money supply, reflecting inflation.

In the Keynesian Model in the Long Run,an Increase in the Money