Economists who believe that fiscal policy is more potent than monetary policy argue that the:
A)responsiveness of investment to the interest rate is small.
B)responsiveness of investment to the interest rate is large.
C)IS curve is nearly horizontal.
D)LM curve is nearly vertical.

Question

Quizplus · Accepted Answer

Economists who believe fiscal policy is more potent argue that investment is not very responsive to interest rates, meaning changes in fiscal policy (like government spending) have a more direct impact on aggregate demand than changes in monetary policy (like interest rates).

Economists Who Believe That Fiscal Policy Is More Potent Than