If investment is not very sensitive to interest rate changes,
A) fiscal policy will be largely ineffective in changing output
B) monetary policy will be very effective in changing output
C) the economy is in the classical case
D) monetary policy cannot be used to lower interest rates
E) the size of the crowding out effect following expansionary fiscal policy will be small
Correct Answer:
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Q2: If we have a normal IS-curve but
Q3: The transmission mechanism between an open market
Q4: A change in which of the following
Q5: If the Fed undertakes open market sales,
Q6: Fiscal policy is weakest and monetary policy
Q7: Monetary policy becomes more effective as
A)the marginal
Q8: In an IS-LM model, if we assume
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
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