Suppose there is a decline in the demand for money at each


Suppose there is a decline in the demand for money. At each output level and interest rate the public now wants to hold lower real balances.

a. In the Keynesian case, what happens to equilibrium output and to prices?

b. In the classical case, what is the effect on output and on prices?

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Econometrics: Suppose there is a decline in the demand for money at each
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