If the investment curve is relatively vertical, the Keynesian conclusion is that the transmission mechanism has little effect on the economy.

Question

Quizplus · Accepted Answer

A relatively vertical investment curve means that changes in interest rates or other factors affecting investment have little impact on overall investment levels in the economy. This implies that the transmission mechanism (how changes in monetary policy affect the economy) has little effect on the economy, which is a Keynesian interpretation.

If the Investment Curve Is Relatively Vertical, the Keynesian Conclusion