If Investment Is Not Sensitive to Changes in the Interest

question 133

Multiple Choice

If investment is not sensitive to changes in the interest rate,then changes in the money supply:

• A)will have no effect on interest rates.
• B)will have no impact on the quantity of money demanded.
• C)will have no effect on the aggregate demand of an economy.
• D)will have a major impact on the aggregate demand of an economy.
• E)will have a major impact on the price level in an economy.

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Definitions:

Opportunity Cost

The cost of foregoing the next best alternative when making a decision, representing the benefits one misses out on.

Production Possibilities Schedule

A table or graph showing the different quantities of two goods that can be produced using the same resources fully and efficiently.

Steel

A hard, strong alloy of iron with carbon and usually other elements, used extensively as a structural and fabricating material.

Utility

A measure of satisfaction, usefulness, or value derived from consuming goods and services.