Keynes effect

The Keynes effect is a term used in economics to describe a situation where a change in interest rates affects expenditure more than it affects savings. As prices fall, a given nominal amount of money will become a larger real amount. As a result the interest rate will fall and investment demanded rise. This Keynes effect does not occur in the liquidity trap.

See also

 This economics or finance-related article is a stub. You can help Wikipedia by expanding it.

See also: Keynes effect, Economics, Finance, Interest rate, John Maynard Keynes, Liquidity trap, Pigou effect, Price, Real vs. nominal in economics