When the LM-Curve Is Vertical

question 22

Multiple Choice

When the LM-curve is vertical,

• A)the monetary policy multiplier is zero
• B)monetary policy is at its weakest but fiscal policy has a maximum effect on income
• C)monetary policy has a maximum effect, but fiscal policy has no effect on income
• D)fiscal policy's impact on interest rates will not affect investment
• E)monetary policy affects interest rates but no change in investment spending results

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Definitions:

Subjectivity

Subjectivity pertains to how someone's judgment is shaped by personal opinions and feelings instead of external facts or evidence.

Centre-of-Gravity

A method in location analysis that finds the best location for a facility based on minimizing transportation costs, taking into account the geographical distribution of supply and demand.

Tonnes

A metric unit of mass equal to 1,000 kilograms or approximately 2,204.6 pounds.

Grinding Mill

A machine used for breaking down materials by friction, crushing, or cutting.