Keynes assumed that when interest rates are very low, people do not care whether their savings are

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Keynes assumed that when interest rates are very low, people do not care whether their savings are invested (and earning interest) or kept in cash. This problem illustrates what happens if this is not true. Suppose an economy is in equilibrium at Q = $10,000. At this income, people want to hold $1,000 in cash, no more and no less. MPC = 0.8. What will happen if planned investment spending increases by $100?

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