In the Keynesian Transmission Mechanism,if Investment Is Completely Interest-Insensitive,then an Increase

question 139

Multiple Choice

In the Keynesian transmission mechanism,if investment is completely interest-insensitive,then an increase in the money supply will

• A) cause total expenditures and aggregate demand to increase.
• B) cause total expenditures and aggregate demand to decrease.
• C) have no impact on total expenditures and aggregate demand.
• D) cause total expenditures to increase and aggregate demand to decrease.
• E) cause total expenditures to decrease and aggregate demand to increase.

---

Definitions:

Unrealized Profit/(Loss)

A profit or loss that results from an investment that has not yet been sold or finalized.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the consumption or wear and tear of the asset.

Effective Tax Rate

The average rate at which an individual or corporation is taxed, calculated by dividing total taxes paid by the taxable income.

Cost Method

An accounting approach where investments are recorded at their original purchase cost, without adjustment for changes in market value.