Suppose there is a decline in the demand for money . At each output le – InterviewSolution

1.	Suppose there is a decline in the demand for money . At each output level and interest rate the public now wants to hold lower real balances. a:In the Keynesian case , what happens to equilibrium output and to prices. b: In the classical case, what is the effect on output and on prices
Answer» In the Keynesian CASE, what happens to EQUILIBRIUM output and to prices? Answer: A decrease in money demand lowers the interest RATE and increases INVESTMENT and THUS income

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