If Private Sector Investment Does Not Respond Much to Interest

question 155

Multiple Choice

If private sector investment does not respond much to interest rate changes, then

• A) there will be more crowding out when expansionary policies are undertaken.
• B) there will be less crowding out when expansionary policies are undertaken.
• C) fiscal policy will be less effective than monetary policy.
• D) monetary policy will be more effective than fiscal policy.

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Definitions:

Conflict Theory

A sociological perspective that sees social life as a competition, and focuses on the distribution of resources, power, and inequality.

Morphogenesis

The biological process that causes an organism to develop its shape and structure.

Power Balance

The distribution of power among entities in a group, organization, or society, aiming for equilibrium where no single entity overwhelmingly dominates.

Moral Absolutism

The ethical belief that certain actions are universally right or wrong, regardless of context or consequences.