|Mause I 56
Interest Rates/Keynes: According to his liquidity preference theory, interest is a monetary phenomenon, not a real one as in Neoclassicism. Interest rates are therefore mainly determined by money supply and demand - less by real factors such as capital supply and demand. For this reason, monetary policy can influence real variables (such as the level of investment) via the level of interest rates. On the other hand, as a result of nominal wage rigidity, the money supply and price levels have an impact on the level of real wages and thus on the level of employment. Unlike neoclassicism, Keynes' system cannot see real and monetary aspects of economic activity independently. (1)
1. Cf. .J. M. Keynes, The general theory of employment, interest and money. London 1936._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. The note [Author1]Vs[Author2] or [Author]Vs[term] is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.
John Maynard Keynes
The Economic Consequences of the Peace New York 1920
Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018