Suppose the government wants to change the level of output. If the LM curve is horizontal, then

Business

1 answer:

Feliz [49]3 years ago

7 0

Answer:

a. monetary policy is completely ineffective, whereas fiscal policy is highly effective.
a. monetary policy is completely ineffective, whereas fiscal policy is highly effective.

Explanation:

When the LM curve is horizontal, a change in money supply will not impact interest rates which would make monetary supply completely ineffective because people will be able to keep borrowing regardless of the money supply level in the economy.

If the IS curve is vertical, it means that output is independent of interest rates. This would again render monetary supply completely ineffective as output will not change as a result of a change in money supply. Fiscal policy will still work however because it would lead to more output being created via the multiplier process.

You might be interested in

In the design of a chemical plant, the following costs and revenues (in the third year of production) are projected:

miss Akunina [59]

Answer:

Explanation:

6 0

3 years ago

The fact that a family would spend a lot more time researching the market before buying a new car than it would in the decision

lana66690 [7]

Answer: perceived benefits versus perceived costs of search

Explanation:

The fact the family takes more time in that which is more valuable shows that it follows the concept of perceived benefits versus perceived costs of search. The car is of greater value than the kitchen appliance hence the carefulness for it's selection.

8 0

3 years ago

Which of the following colors is highly variable and can be either cool or slightly warm, depending on how it is used?

Phoenix [80]

Explanation:

Dark blue with dark red

3 0

2 years ago

What are the required components of a database function? Check all that apply. = D in front of the command a single argument ran

slavikrds [6]

The required components of a database function in the computer science and programming includes:

D in front of the command
Range
Field
Criteria

According to the given question, we are asked to state the required components of a database function and how this is essential for the database to function properly.

As a result of this, we can see that the required components of the database function include the =, the range, field, criteria and the D in front of the command.