What effect does the expansion of the money supply during a recession have, according to Keynesians?

The expansion of the money supply during a recession is viewed by Keynesians as a significant stimulus to both investment and aggregate demand. When the money supply is increased, interest rates typically decrease. Lower interest rates make borrowing cheaper for businesses and consumers, which encourages investment in capital projects and increased spending on goods and services.

This increase in investment leads to higher consumer spending as businesses expand operations and hire more workers, ultimately contributing to economic recovery. The Keynesian view emphasizes that during a recession, there is often unused capacity and unemployment, so an increase in aggregate demand can stimulate the economy effectively. Thus, the belief is that by expanding the money supply, the government can induce a significant increase in both investment and aggregate demand, helping to pull the economy out of the recessionary period.