If Interest Rates Are __________ to Changes in the Money

question 122

Multiple Choice

If interest rates are __________ to changes in the money supply and planned investment expenditures are __________ to interest rate changes,then monetary policy will be ineffective in changing aggregate demand.

• A)responsive; sensitive
• B)responsive; insensitive
• C)not responsive; sensitive
• D)not responsive; insensitive
• E)none of the above

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Definitions:

Variable Costs

Costs that change in proportion to the level of production or business activity.

Variable Overhead

Variable overhead refers to costs that fluctuate with production levels, such as utilities and raw materials, unlike fixed overhead costs which remain constant regardless of production volume.

Fixed Overhead

Regular, consistent expenses not directly tied to production levels, such as rent, salaries, and insurance.

Direct Labor

The wages and benefits paid to employees who are directly involved in the production of goods or services.