If the Demand for Money Is Insensitive to the Interest

question 27

Multiple Choice

If the demand for money is insensitive to the interest rate, then the most effective expansionary policy would be

• A)fiscal policy.
• B)monetary policy.
• C)neither fiscal nor monetary policy.
• D)both fiscal and monetary policy.

---

Definitions:

Accounts Receivable Approach

A method used to estimate the value of a firm's accounts receivable and gauge the potential for uncollectible invoices.

Net Present Value

A financial metric that calculates the present value of all cash flows associated with a project or investment, considering both inflows and outflows, to assess its profitability.

Monthly Interest Rate

The interest rate applied to a loan or debt on a monthly basis, often used for calculating monthly payments on a loan.

Carrying Cost

The total cost of holding inventory, including storage, insurance, taxes, and opportunity costs, but not limited to these.