According to Keynes an increase in money supply by the Fed r

According to Keynes, an increase in money supply by the Fed results in a lower interest rate. The lower interest rate in turn stimulates consumption and investment. This increase in aggregate demand then causes the real GDP to increase.

Solution

Lowering the interest rate will help people to take more loan which will in turn increase the money supply. This increase in the money supply will help people to make more purchases which will increase the aggregate demand. This demand will led to more production and hence the GDP will increase.

According to Keynes, an increase in money supply by the Fed results in a lower interest rate. The lower interest rate in turn stimulates consumption and investm

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