Those 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 that fiscal policy is more potent than monetary policy argue that the responsiveness of investment to the interest rate is small. This means that changes in interest rates may not have a significant impact on investment levels, making monetary policy less effective in stimulating the economy compared to fiscal policy.

Those Economists Who Believe That Fiscal Policy Is More Potent