Assume the economy is operating at less than full employment. Keynesians (Libera

Question

Assume the economy is operating at less than full employment. Keynesians (Liberals) will suggest pursuing an expansionary monetary policy will cause interest rates to ________, which will ___________ investment spending. Ultimately, this will shift AD to the right and bring the economy back to full employment GDP. This is called ____________ Policy.

increase; decrease; Monetarist

decrease; decrease; Fiscal

decrease; increase; Monetary

increase; increase; Austrian

increase; decrease; Monetarist

decrease; decrease; Fiscal

decrease; increase; Monetary

increase; increase; Austrian

Explanation / Answer

Correct option is (3).

Keynesians say that when economy is at less than full employment, there is a recession that can be overcome by increasing aggregate demand by increasing money supply (Which is a Monetary policy). Higher money supply increases investment, therefore increasing aggregate demand.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.