Final answer:
When capital investment increases output but demand stays constant in a Keynesian framework, quantity supplied increases and price decreases due to surplus supply, corresponding to the answer (b) Quantity Increase, Price Decrease.
Step-by-step explanation:
If increased capital investment leads to higher levels of output of goods without a corresponding increase in demand, assuming a Keynesian supply curve and the level of aggregate demand is greater than full employment, the aggregate equilibrium quantity will increase. Since the demand has not changed, the increased supply will likely result in a decrease in price levels due to surplus supply. Thus, the answer would be (b): Quantity Increase, Price Decrease.
In Keynesian economics, when the aggregate supply (AS) curve is in the relatively flat portion, increases in aggregate demand (AD) have a larger impact on output and employment than on prices. Conversely, when AD increases in the steep portion of the AS curve, prices tend to increase more sharply, and there's a smaller impact on output and employment.
Given the question's assumption of demand remaining unchanged, the condition suggests we are on the relatively flat portion of the AS curve, where output can increase with minimal price changes.