In the Keynesian model, which of the following will cause a reduction in interest rates?
A) An increase in money demand
B) An increase in money supply
C) An increase in saving
D) A decline in saving

Question

Quizplus · Accepted Answer

According to the Keynesian model, an increase in money supply will cause a reduction in interest rates. This is because a higher supply of money relative to demand will lower the price (i.e. interest rate) at which money can be borrowed. Options A, C, and D are incorrect as they do not directly relate to changes in interest rates in the Keynesian model.

In the Keynesian Model, Which of the Following Will Cause