Suppose That Investment Is Not Very Responsive to Interest Rates

question 208

Multiple Choice

Suppose that investment is not very responsive to interest rates, so that a sizable increase in interest rates has only a minor effect on investment. In this case, monetary policy would have:

• A)no effect on output.
• B)a modest effect on output.
• C)a substantial effect on output.
• D)a massive effect on output.

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