Keynes Argued That Monetary Policy Would Be Impotent During the Great

question 70

Multiple Choice

Keynes argued that monetary policy would be impotent during the Great Depression because

• A)the LM curve was horizontal and the IS curve was vertical.
• B)the LM curve was continuously shifting and the IS curve was vertical.
• C)the LM curve was vertical and the IS curve was nearly flat.
• D)both the LM curve and the IS curve were shifting rightward at the same time.

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Definitions:

Free-Trade Policies

Economic policies that allow imports and exports to occur without restrictive tariffs, quotas, or other barriers to trade.

Protection

The practice of shielding a sector of the economy from foreign competition.

General Agreement on Tariffs and Trade

An international treaty aimed at promoting international trade by reducing or eliminating trade barriers such as tariffs and quotas; it was replaced by the World Trade Organization (WTO) in 1995.

Voluntary Export Restraint

A self-imposed limitation by exporting countries on the volume of their exports of a particular good.