According to Keynesians, an increase in the money supply will:
a. only increases prices.
b. increase the interest rate, and decrease investment, aggregate demand, prices, real GDP, and employment.
c. decrease the interest rate, and decrease investment, aggregate demand, prices, real GDP, and employment.
d. decrease the interest rate, and increase investment, aggregate demand, prices, real GDP, and employment.
d
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Refer to the above figure. If real GDP is $4 trillion, then
A) actual investment spending equals $1 trillion as planned investment spending plus unplanned inventory increases equal $1 trillion. B) consumption expenditures are too low. C) unplanned inventories will decrease. D) unplanned inventories will increase.
Unemployment increases when
A) an inflationary gap is created. B) potential GDP increases. C) the government decreases its expenditure on goods and services. D) aggregate demand increases. E) aggregate supply increases.