If Investment Is Not Very Sensitive to Interest Rate Changes

question 37

Multiple Choice

If investment is not very sensitive to interest rate changes,

• A)fiscal policy will be largely ineffective in changing output
• B)monetary policy will be very effective in changing output
• C)the economy is in the classical case
• D)monetary policy cannot be used to lower interest rates
• E)the size of the crowding out effect following expansionary fiscal policy will be small

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