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

question 51

Multiple Choice

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

• A) fall; rise; right; not change
• B) fall; rise; left; rise
• C) rise; rise; right; rise
• D) fall; rise; right; fall
• E) fall; fall; left; fall

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