Use the following diagram to answer the next question.
Based on this diagram, we can say ________.
A. crowding out is limiting the effectiveness of expansionary monetary policy
B. investment demand will not respond when interest rates change
C. there is a liquidity trap
D. monetary policy is likely to be pro-cyclical
Answer: C
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AZT is a drug that inhibits the reproduction of the AIDS virus, thus preventing the full development of the disease. The drug, which is sold in an unregulated market, is very expensive, and many AIDS patients who cannot afford it die from the disease. This case provides ammunition to critics of the market system on the basis of its
A. fairness. B. externalities. C. cost disease in services. D. inefficiency.
A necessary condition for a money economy to be self-regulating is that
A) wages must be flexible in an upward direction, but not in a downward direction. B) the economy must always be operating on its institutional production possibilities frontier. C) wages must be flexible in a downward direction, but not in an upward direction. D) interest rates must be flexible in the credit market. E) none of the above
The pattern of the 1930s through the middle-1990s was
A. surpluses interspersed with a few years of deficits. B. deficits each and every year. C. deficits interspersed with a few years of surplus. D. surpluses each and every year.
Which of the following would cause the demand for labor to change?
A. a change in the price of the good produced B. a change in the cost of living C. changes in the wage rate D. movements along the labor demand curve