In the simplest Keynesian model of the determination of income,interest rates are assumed
A)to be exogenous and to influence desired spending.
B)to be endogenous and not to influence desired spending.
C)to be endogenous and to influence desired spending.
D)to be exogenous and not to influence spending.

Question

Quizplus · Accepted Answer

In the simplest Keynesian model, interest rates are assumed to be exogenous factors that can influence desired spending. This means that changes in interest rates can lead to changes in the levels of investment and consumption, which in turn affect the overall level of income in the economy. This approach is consistent with the view that monetary policy can be used to manage aggregate demand and stabilize the economy.

In the Simplest Keynesian Model of the Determination of Income,interest