z. Many early Keynesians, influenced by the Great Depression, thought that an increase in the supply of

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z. Many early Keynesians, influenced by the Great Depression, thought that an increase in the supply of money would be completely offset by a reduction in its velocity.

Under these conditions, monetary policy would influence neither aggregate demand nor prices. Modern Keynesians believe that monetary policy, acting through the interest rate, does influence both aggregate demand and the price level.

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Macroeconomics Private And Public Choice

ISBN: 9780123110701

2nd Edition

Authors: James D Gwartney; Richard Stroup; A H Studenmund

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