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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Definitions:

Coalition

A coalition refers to an alliance among individuals, during which they cooperate in joint action, each in their own self-interest, joining forces together for a common cause.

Group Members

Individuals who belong to a social or organizational group, share common goals, and are interconnected through roles, norms, and relationships within the group context.

Overwhelm

A state of being overpowered by emotions, tasks, or information to the extent that it is difficult to cope or respond effectively.

Tit For Tat

A strategy in conflict situations where an individual responds to an action with a similar or equivalent action; often described in the context of reciprocal actions.