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If Neither Investment nor Consumption Depends on the Interest Rate

question 70

Multiple Choice

If neither investment nor consumption depends on the interest rate, then the IS curve is ______ and ______ policy has no effect on output.

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Definitions:

Bonds

Long-term debt securities issued by corporations, governments, or other entities to finance operations or projects, which obligate the issuer to pay interest to bondholders.

Accrued Interest

The interest that has accumulated on a bond or loan since the last interest payment was made but has not yet been paid to the lender.

Long-Term Investment

Assets purchased by a company that are intended to be held for more than one year for the purpose of earning returns on the investment over time.

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