The Economy Is in the Horizontal Portion of the AS Curve,investment

question 74

Multiple Choice

The economy is in the horizontal portion of the AS curve,investment spending is interest insensitive and there is no liquidity trap.According to the Keynesian transmission mechanism,if the money supply increases the interest rate will __________,investment spending will __________,the AD curve will __________,and Real GDP will __________.

• A) fall; fall; left; fall
• B) rise; drop; left; fall
• C) fall; remain unchanged; not shift; not change
• D) rise; remain unchanged; not shift; not change
• E) none of the above