In the liquidity trap case where the LM schedule is nearly horizontal,
a. both monetary and fiscal policy are highly effective.
b. monetary and fiscal policy are ineffective.
c. monetary policy is ineffective and fiscal policy is effective.
d. fiscal policy is ineffective and monetary policy is effective.
C
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If consumers buy a large number of plug-in electric cars, the equilibrium price of electricity will ________ and the equilibrium quantity of electricity will ________
A) rise; decrease B) not change; increase C) fall; increase D) fall; decrease E) rise; increase
In the interest rate parity condition with imperfect substitutes and a risk premium of ?
A) an increased stock of domestic government debt will raise the difference between the expected returns on domestic and foreign currency bonds. B) a decreased stock of domestic government debt will raise the difference between the expected returns on domestic and foreign currency bonds. C) an increased stock of domestic government debt will reduce the difference between the expected returns on domestic and foreign currency bonds. D) an increased stock of domestic government debt will have no effect on the difference between the expected returns on domestic and foreign currency bonds. E) a decreased stock of domestic government debt will have no effect on the difference between the expected returns on domestic and foreign currency bonds.