If money demand is extremely sensitive to changes in the interest rate, then the LM curve is almost and policy is very effective on output. O a. vertical; monetary Ob. horizontal; fiscal c.vertical; fiscal d. horizontal; monetary

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Question
Economics
If money demand is extremely sensitive to changes in the interest rate, then
the LM curve is almost
and
policy is very effective on output.
a. vertical; monetary
Ob. horizontal; fiscal
Ocvertical; fiscal
O d. horizontal; monetary
Transcribed Image Text:If money demand is extremely sensitive to changes in the interest rate, then the LM curve is almost and policy is very effective on output. a. vertical; monetary Ob. horizontal; fiscal Ocvertical; fiscal O d. horizontal; monetary
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