Economics For Today
Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Chapter 26, Problem 8SQ
To determine

The impact of increase in money supply according to Keynesians.

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In contrast to the classical school of economists John Maynard Keynes has a different view of people's behavior in holding money. Explain how the theory of money demand according to John Maynard Keynes!
.......... implies that an increase in .......... will increase ........... a.Neutrality of money/inflation / real interest rates, b.Inflation / prices / both saving and investment c.Neutrality of money/ the money supply / nominal interest rates. d.Inflation / prices / real GDP e.Neutrality of money / the money supply / real interest rates
Money neutrality is the idea that a. any policy can have intended and unintended consequences b. in the long-run, markets will clear and return the economy to equilibrium regardless of what happens to the money supply. c. there are two types of variables, nominal and real, and only nominal variables are affected by the money supply. d. nominal and real interest rates are unrelated.   During the middle of the 20th century, income inequality in developed economies generally fell. The reason for this was a. average incomes didn't rise but welfare systems redistributed income.  b. that returns to assets held by high income earners fell steadily. c. incomes overall rose but taxation systems were slowly made more and more progressive. d. a rise in average income with incomes of the bottom deciles rising faster than the top.
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