If the United States follows an expansionary monetary policy relative to Japan and Germany, which of the following is not likely to occur?
A) U.S. interest rates will rise relative to Japan and Germany
B) a larger U.S. capital account deficit
C) a depreciation of the dollar
D) lower level of U.S. income
D
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When contractionary fiscal policy leads to
A) less private investment because of higher interest rates, the change in investment is called crowding in by economists. B) more private investment because of lower interest rates, the change in investment is called crowding in by economists. C) less private investment because of lower interest rates, the change in investment is called crowding in by economists. D) less private investment because of higher interest rates, the change in investment is called crowding out by economists.
Monetary policy loses its effectiveness in all of the following situations EXCEPT
A) when the IS curve is vertical. B) when the LM curve is nearly horizontal. C) when interest rate controlled by the Fed reaches zero. D) when the IS curve is horizontal.