The LM curve will be vertical and fiscal policy ineffective when
A) the demand for money is unaffected by changes in the interest rate.
B) the demand for money is unaffected by changes in income.
C) investment is unaffected by changes in the interest rate.
D) investment is unaffected by changes in income.
A
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A worker pays a tax for Social Security at a constant rate up until a certain level of income is reached. Beyond that income level, no more Social Security tax is paid. The Social Security tax is an example of a
A) progressive tax. B) regressive tax. C) proportional tax. D) sales tax.
To prevent the dollar from depreciating, the U.S. central bank can try to fix the currency value of the dollar when they
A) buy U.S. dollars in the foreign exchange market. B) sell U.S. dollars in the foreign exchange market. C) abandon the U.S. dollar and use another country's currency as its legal currency. D) buy foreign currencies in the foreign exchange market.