Assume the Keynesian Transmission Mechanism Is Operational and the Economy

question 144

Multiple Choice

Assume the Keynesian transmission mechanism is operational and the economy is currently operating in the horizontal portion of the AS curve.If the money supply decreases and the demand for money curve is downward sloping and investment is interest-____________,then Real GDP will ___________________.

• A) sensitive; fall
• B) insensitive; fall
• C) sensitive; rise
• D) insensitive; rise
• E) sensitive; remain unchanged

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