The LM-curve is vertical when
A) the interest elasticity of investment is zero
B) the central bank keeps nominal money supply constant
C) we are in the classical case
D) we are in the liquidity trap
E) none of the above
Correct Answer:
Verified
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
Q14: The view that "only money matters" is
Q15: When the government employs a "tight fiscal
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
Q20: Monetary policy becomes less effective as
A)the marginal
Q21: Expansionary fiscal policy can be successful without
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