Question

Investment spending is insensitive to changes in the interest rate and the SRAS curve is upward sloping. According to a monetarist, an increase in the money supply will __________ Real GDP. According to a Keynesian, an increase in the money supply will __________ Real GDP.

Answer 1

Increase, Increase

Step-by-step explanation:

• An increase in monetary policy will increase the supply of money in the economy. The increase in supply will lead to an increase in nominal output. This will lead to higher GDP and more real output. There leading to higher spending in the economy.