A Monetary Policy That Tries to Maintain Fairly Constant Interest

question 51

Multiple Choice

A monetary policy that tries to maintain fairly constant interest rates

• A) makes random shocks to the IS curve more harmful in terms of variation in GDP.
• B) makes random shocks to the IS curve less harmful in terms of variation in GDP.
• C) makes random shocks to the LM curve more harmful in terms of variation in GDP.
• D) has no effect on the sensitivity of GDP to random shocks in the IS curve.
• E) has no effect on the sensitivity of GDP to random shocks in the LM curve.

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