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    Question

    According to John Maynard Keynes, which one of the

    following statements is correct for a closed economy operating at less than full employment level of output?
    A Savings determines investment Correct Answer Incorrect Answer
    B Investment determines savings Correct Answer Incorrect Answer
    C Changes in the money supply have no impact on output Correct Answer Incorrect Answer
    D Speculative demand for money is determined by the output level Correct Answer Incorrect Answer

    Solution

    As per Keynes, Investment determines savings for a closed economy. And changes in money have no impact on the output, only change in real variables can affect output. Moreover, speculative demand for money is determined by the interest rate.

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