Monetary Policy Is Ineffective in Bringing About Changes in Aggregate

question 65

Multiple Choice

Monetary policy is ineffective in bringing about changes in aggregate demand when the

• A)investment demand curve and money demand function are both relatively steep.
• B)investment demand curve is relatively steep and the money demand function is relatively flat.
• C)investment demand curve and money demand function are both 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.

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Definitions:

Risk-free Asset

An investment considered to have no risk of financial loss, typically associated with government bonds.

Promotion

Marketing strategies and tactics used to increase awareness, interest, and sales of a product or service.

Over-optimism

The tendency to overestimate the likelihood of positive outcomes in situations or decisions.

Worker

An individual engaged in a specific activity or labor, especially for economic gain.