Monetary Policy Becomes More Effective as

question 38

Multiple Choice

Monetary policy becomes more effective as

• A)the interest sensitivity of investment increases
• B)money demand becomes less sensitive to changes in the interest rate
• C)the marginal propensity to save decreases
• D)the income tax rate decreases
• E)all of the above

---

Definitions:

General Partnership

A business arrangement where two or more individuals share ownership, as well as the profits, liabilities, and management duties.

Hedge Funds

Hedge funds are investment funds that employ various strategies to earn active returns for their investors, often engaging in leveraged, long, short, and derivative positions.

Private Equity Funds

Investment funds that gather capital from wealthy individuals or institutions to invest in buying and reorganizing private companies.

Separation Theorem

States that a firm’s investment decisions should be separate from the investment preferences of its investors.