If Money Demand Is Extremely Sensitive to the Interest Rate

question 134

Multiple Choice

If money demand is extremely sensitive to the interest rate, then the ______ curve is ______.

• A) IS; vertical
• B) IS; horizontal
• C) LM; vertical
• D) LM; horizontal

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Definitions:

Payroll Checks

Payments made to employees for the work they have done, often processed through a company's payroll system.

Current Liabilities

Current liabilities are obligations a company needs to pay off within a year, such as accounts payable, short-term loans, and accrued expenses.

Company's Liquidity

A measure of a firm's ability to meet its short-term obligations using its most liquid assets.

Internal Accounting Control

Procedures and policies implemented by a company to ensure the integrity and accuracy of its financial and accounting information.