Economics · Macroeconomics
In the Keynesian system, an increase in money supply will increase the demand for goods and services primarily by:
- 1Increasing real wage and thereby increasing the transaction demand
- 2Reducing bond demand and thereby reducing the interest rate
- 3Increasing bond demand and thereby reducing the interest rate✓
- 4Increasing consumption via Real Balance Effect
Correct answer
Increasing bond demand and thereby reducing the interest rate
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