If Money Demand Does Not Depend on the Interest Rate

question 5

Multiple Choice

If money demand does not depend on the interest rate then

• A)the LM curve if vertical and fiscal policy is ineffective.
• B)the LM curve is horizontal and fiscal policy is ineffective.
• C)the LM curve is horizontal and horizontal has no effect on output.
• D)the LM curve is vertical and monetary policy is ineffective.

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Definitions:

Entrepreneurs

Individuals who create, organize, and operate a business or businesses, taking on greater than normal financial risks in order to do so.

C Corporation

A type of corporate structure where shareholders are taxed separately from the corporation, characterized by potential double taxation on earnings and dividends.

LLC

Limited Liability Company, a business structure in the U.S. that protects its owners from personal responsibility for its debts or liabilities.

LLC

Limited Liability Company, a flexible form of enterprise that blends elements of partnership and corporate structures, providing limited liability to its owners.