In an IS-LM Model, If We Assume That Money Demand

question 33

Multiple Choice

In an IS-LM model, if we assume that money demand is completely insensitive to changes in the interest rate,

• A)fiscal policy cannot change the level of output but will change the composition of GDP
• B)monetary policy is totally ineffective in changing the level of output
• C)interest rates cannot be lowered by fiscal or monetary policy
• D)the economy cannot be stimulated by fiscal or monetary policy
• E)monetary policy can change income but not interest rates

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