If We Change the Assumption That Money Supply Is Fixed

question 28

Multiple Choice

If we change the assumption that money supply is fixed but instead assume that the amount of money supplied increases as the interest rate increases, then

• A)the LM-curve will become flatter
• B)the LM-curve will become steeper
• C)the LM-curve will shift to the left
• D)monetary policy will be more effective
• E)both A and D

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Definitions:

Fabrication Department

A specialized sector within manufacturing focusing on the construction and assembly of product parts or components.

Assembly Department

A section of a manufacturing facility where components are put together to form a finished product.

Single Plantwide Factory Overhead Rate

A single rate used to allocate factory overhead costs to products, calculated by dividing total overhead costs by a base, usually total direct labor hours or machine hours.

Direct Labor Hours

The total hours worked by employees that can be directly associated with the production of goods or services.