If the Money Demand Function Is Unstable Then ________

question 64

Multiple Choice

If the money demand function is unstable then ________.

• A) velocity of money is unstable and monetary policy is more effective
• B) monetary policy is ineffective
• C) fiscal policy is more effective than monetary policy
• D) neither fiscal nor monetary policy will impact aggregate output

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Definitions:

Domestic Producers

Firms or individuals that manufacture or produce goods and services within a country's borders.

Subsidies

Financial assistance granted by the government to individuals, organizations, or industries to support business activities and encourage economic growth.

Special Taxes

Levies imposed on specific goods, services, or activities, often with the intention of discouraging usage or generating revenue for targeted purposes, distinct from broad-based taxes like income tax.

Tariff

A tax imposed by a government on imports or exports of goods and services.