3. According to the Keynesian view, expansionary monetary policy will reduce the interest rate, thereby stimulating investment

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3. According to the Keynesian view, expansionary monetary policy will reduce the interest rate, thereby stimulating investment and leading to an increase in aggregate demand. A restrictive monetary policy will increase the interest rate, thereby discouraging investment and reducing aggregate demand. The interest rate is the mechanism that transmits monetary policy in the Keynesian model.

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