Q.5. Do you agree with the following statements? Graphically explain. Also graphically discuss the impact of expansionary monetary and fiscal policies on the curves. a. If investment does not depend on the interest rate, the S curve is vertical. b. If money demand does not depend on income, the L curve is horizontal. c. If money demand is perfectly sensitive to the interest rate, the L curve is horizontal.
Q.5. Do you agree with the following statements? Graphically explain. Also graphically discuss the impact of expansionary monetary and fiscal policies on the curves. a. If investment does not depend on the interest rate, the S curve is vertical. b. If money demand does not depend on income, the L curve is horizontal. c. If money demand is perfectly sensitive to the interest rate, the L curve is horizontal.
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