Question

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 1

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