The view that "only money matters" is accurate when
A) investment is completely interest insensitive
B) money demand is completely interest inelastic
C) money demand is completely interest elastic
D) we are in the liquidity trap
E) both C and D
Correct Answer:
Verified
Q9: The liquidity trap exists when
A)the IS-curve is
Q10: In the classical case,
A)the fiscal policy multiplier
Q11: If we were in a liquidity trap,
A)investment
Q12: One side effect of expansionary fiscal policy
Q13: If money supply is held constant, a
Q15: When the government employs a "tight fiscal
Q16: The LM-curve is vertical when
A)the interest elasticity
Q17: The transmission mechanism
A)is the process by which
Q18: Fiscal policy becomes more powerful in changing
Q19: When the LM-curve is vertical,
A)the monetary policy
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