Explain with the Use of a Graph Why the Shape

question 19

Essay

Explain with the use of a graph why the shape of the money demand curve makes a difference in terms of the effectiveness of monetary policy. (Hint: draw one money demand curve very steep and another very flat)

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Definitions:

Normative Social Influence

The influence of other people that leads an individual to conform in order to be liked and accepted by them.

Conformity

The act of adjusting one's behavior or thinking to match the standards or norms of a group or society.

Arousal

The physiological and psychological state of being awoken or stimulated to action, often associated with increased activity in the sympathetic nervous system.

Difficult Tasks

Activities or problems that require significant effort, skill, or intellectual capacity to be completed successfully.