The Money Supply Increased and the AD Curve Did Not

question 168

Multiple Choice

The money supply increased and the AD curve did not shift to the right.This is consistent with the

• A) Keynesian transmission mechanism when there is either a liquidity trap or interest-insensitive investment.
• B) monetarist transmission mechanism when there is interest-insensitive investment.
• C) Keynesian transmission mechanism when there is a liquidity trap.
• D) monetarist transmission mechanism when there is a liquidity trap.
• E) c and d

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Definitions:

Option Clearing Corporation

The organization responsible for ensuring the proper settlement of options contracts and mitigating counterparty risk in the options market.

Post Margin

The amount of collateral a participant must deposit with a clearinghouse to cover potential future losses on positions.

Purchased

The act of acquiring ownership of an asset in exchange for payment.

Digital Option

A type of option that pays either a fixed amount of cash or nothing at all, depending on whether a certain condition is met at expiration.