Which of These Is a Keynesian View on Why Monetary

question 61

Multiple Choice

Which of these is a Keynesian view on why monetary policy could be ineffective?

• A) If interest rates are extremely low, there is little incentive to save. In this case, expansionary monetary policy has little impact on investment spending.
• B) Markets adjust so quickly to new equilibria that there is no change in output or price level.
• C) While monetary policy is more effective than fiscal policy, policymakers are unable to control whether its impact is greater on prices or on output.
• D) The crowding-out phenomena reduces the impact of monetary policy.

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