Other things equal, a given change in money supply has a larger effect on demand the:
A) flatter the IS curve.
B) steeper the IS curve.
C) smaller the interest sensitivity of expenditure demand.
D) larger the income sensitivity of money demand.

Question

Quizplus · Accepted Answer

A flatter IS curve indicates that changes in the interest rate have a larger effect on output, meaning that a change in the money supply will have a larger impact on demand.

Other Things Equal, a Given Change in Money Supply Has