9 In the short-run monetary is less effective at increasing real output,when:either the marginal propensity to consume is smaller and/or the realinterest rate sensitivity of investment is largerO larger tax increases are usedthe real interest rate sensitivity of money demand is smallerO the income sensitivity of money demand is smallergovernment spending is cut by moreautonomous investment is largerO the real interest rate sensitivity of money demand is largerautonomous consumption is largerO the income sensitivity of money demand is largereither the marginal propensity to consume is larger and/or the real interestrate sensitivity of investment is smaller

Monetary policy is a set of tools used by a country's central bank to promote long-term economic…

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In the short-run monetary is less effective at increasing real output, when:

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

In the short-run monetary is less effective at increasing real output,
when:
either the marginal propensity to consume is smaller and/or the real
interest rate sensitivity of investment is larger
O larger tax increases are used
the real interest rate sensitivity of money demand is smaller
O the income sensitivity of money demand is smaller
government spending is cut by more
autonomous investment is larger
O the real interest rate sensitivity of money demand is larger
autonomous consumption is larger
O the income sensitivity of money demand is larger
either the marginal propensity to consume is larger and/or the real interest
rate sensitivity of investment is smaller

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