Assume Investment Is Very Interest Sensitive and Wages Always Adjust

question 32

Multiple Choice

Assume investment is very interest sensitive and wages always adjust immediately to maintain an equilibrium in the labor market.Which of the following would be most effective in significantly increasing the level of output?

• A)expansionary fiscal policy
• B)expansionary monetary policy
• C)increased government spending accompanied by monetary expansion
• D)an increase in government transfer payments
• E)none of the above policies would succeed in significantly increasing the level of output

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