Fiscal policy is weakest and monetary policy is strongest when
A) we are in the liquidity trap
B) money demand is very interest elastic
C) investment is very interest inelastic
D) we are in the classical case
E) the IS-curve is very steep and the LM-curve is very flat
Correct Answer:
Verified
Q1: If investment is not very sensitive to
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,
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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