Investment Spending Is Insensitive to Changes in the Interest Rate

question 1

Multiple Choice

Investment spending is insensitive to changes in the interest rate and the SRAS curve is upward sloping.According to a monetarist,an increase in the money supply will __________ Real GDP.According to a Keynesian,an increase in the money supply will __________ Real GDP.

• A) raise; not change
• B) not change; raise
• C) lower; lower
• D) raise; lower
• E) none of the above

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Definitions:

Conditioned Response

An automatic response established by training to an ordinarily neutral stimulus.

Unconditioned Stimulus

The stimulus normally produced by the unconditioned response (e.g., food producing salivation).

Expectancies

What someone expects to happen, based on past experiences of what was rewarding.

Rewards

Benefits or positive feedback received as a result of an action, which serve as reinforcement for that behavior.