Economics · Keynesian Macroeconomics
When the price level is fixed in the Keynesian model, an increase in the money supply leads to:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1An increase in the level of income and a reduction in the rate of interest.✓
- 2A fall in the money supply, an increase in the level of income, and a reduction in the rate of interest.
- 3An increase in the money supply, a reduction in the level of income, and a reduction in the rate of interest.
- 4An increase in the money supply, an increase in the level of income, and an increase in the rate of interest.
Correct answer
An increase in the level of income and a reduction in the rate of interest.
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