00:01
So again, i don't know exactly what models you're using here, so maybe i can't display this precisely how you want.
00:08
But let me basically try to give you the intuition and a model that solves it.
00:12
So the first thing is a keynesian model.
00:16
When we say a keynesian model, we usually mean that prices are sticky, right? and therefore, when you less demand for money means that there's no way.
00:31
Change in prices, no change in prices, and that means something else adjusts, right? because the economic force has to go somewhere in prices, and that force usually goes through to why.
00:49
So if we draw this in aggregate demand, aggregate supply world, right, you might tell a story like this.
00:55
Output and prices, aggregate supply, aggregate demand, and now we have an increase in aggregate demand, right? the reason that aggregate demand increases is because, right, lower md should lower interest rates, right? if you draw a market for money, m and r, for a fixed money supply, we are lowering money demand, and if we lower money demand, we should get a lower interest rate, right, than we did before.
01:33
So, and the lower r means that consumption should increase, right, and investment should increase.
01:38
So this is the normal kenzyan view, right? output goes up and prices are flat, right? as opposed to a classical view, which would be the exact opposite...