In the Keynesian model, which of the following will cause an increase 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

An increase in money demand, according to the Keynesian model, will cause interest rates to rise because more people are competing for the same amount of money, driving up the price of borrowing money, which is reflected in higher interest rates.

In the Keynesian Model, Which of the Following Will Cause