Increased corporate confidence has boosted the economy's investment and output levels. According to Keynesian short-run theory, the increase in aggregate demand will lower unemployment.
Keynes argued that because "In the long run, we are all dead," governments should solve problems now rather than waiting for long-term fixes brought about by market forces. This is not to say that Keynesians are in favor of periodic policy changes to keep full employment.
According to Keynesian theory, investment would rise if company confidence rose. A spike in interest rates would result from this. The aggregate demand would decline as interest rates increased. Fixed business investment and construction investment would be the components of aggregate demand that would be most severely impacted. Consumer durable goods purchases would also decline.
To know more about Keynesian Short-Run Theory , visit:
https://brainly.com/question/14299791
#SPJ1
