Monetary Policy Will Be Least Effective in Changing Aggregate Demand

question 9

Multiple Choice

Monetary policy will be least effective in changing aggregate demand when the

• A)investment demand curve and money demand function are both relatively flat.
• B)investment demand curve and money demand function are both relatively steep.
• C)investment demand curve is relatively steep and the money demand function is relatively flat.
• D)investment demand curve is relatively flat and the money demand function is relatively steep.
• E)None of the above - monetary policy is always equally effective.

---

Definitions:

Voltage Drop

Decrease in voltage measured after current passes through a resistance. Also known as voltage loss. See definition for the second of Kirchhoff’s Laws.

Ohmmeter

A device used to measure electrical resistance in units called Ohms.

Resistance

In electricity, opposition to current flow measured in ohms.

Non-cycling Circuit Breaker

A type of circuit breaker designed to maintain its off state until manually reset, used to protect electrical circuits from damage.