524) Everything else held constant, when the inflation rate is expected to rise, interest rates will ________; this result has b

Question

Allisa [31]

3 years ago

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524) Everything else held constant, when the inflation rate is expected to rise, interest rates will ________; this result has b

een termed the ________.

Social Studies

1 answer:

Bad White [126] · Answer 1 · 2021-12-02T21:13:21+03:00

The correct answer is rise; Keynes effect

Explanation: The basis for the traditional aggregate demand curve is given by the so-called Keynes effect (the effect of falling wages and prices on the real money supply, interest and investment) and the Pigou effect (the effect of this deflation on real money balances that increase private wealth and end up expanding spending.