If the quantity of money demanded is not affected by changes in the interest rate, the LM curve is ________ and fiscal policy will be ________
A) horizontal; very effective
B) horizontal; ineffective
C) vertical; ineffective
D) vertical; very effective
C
You might also like to view...
In the aggregate expenditures model of the economy, a downward shift in aggregate expenditures can be caused by a decrease in
A. taxes or an increase in government spending. B. government spending or an increase in taxes. C. saving or an increase in government spending. D. interest rates or a decrease in taxes.
Which of the following statements correctly highlights a difference between countries with extractive economic institutions and countries with inclusive economic institutions?
A) Countries with extractive economic institutions typically have better geographical conditions that countries with inclusive economic institutions. B) Countries with extractive economic institutions typically have worse geographical conditions that countries with inclusive economic institutions. C) Entry barriers for new businesses are likely to be lower in countries with extractive economic institutions than in countries with inclusive economic institutions. D) Entry barriers for new businesses are likely to be higher in countries with extractive economic institutions than in countries with inclusive economic institutions.
List and explain factors that determine the size of the expenditure multiplier in the expenditure model when prices are constant
What will be an ideal response?
An "originate-to-distribute" strategy means:
a. Mortgage originators make loans with the intention of having investors purchase and hold them. b. Mortgage originators make loans with the intention of keeping these assets on their balance sheets. c.Innovative mortgage loans are more likely to be sold and distributed to investors' than standard, run-of-the-mill mortgage loans. d. Originating loans is a lengthy process that requires originators to hold mortgages for longer periods than they want. Therefore, a strategy is needed for to distribute these loans as soon as the holding period is done.