HomeworkLib
Question

If neither investment nor consumption depends on the interest rate, then the IS curve is ______...

If neither investment nor consumption depends on the interest rate, then the IS curve is ______ and ______ policy has no effect on output.

a. vertical; monetary

b. horizontal; monetary

c. vertical; fiscal

d. horizontal; fiscal
business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

0 0
Add a comment
Know the answer?
Add Answer to:
If neither investment nor consumption depends on the interest rate, then the IS curve is ______...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • 7. According to the theory of liquidity preference, decreasing the money supply will nominal interest rates...

    7. According to the theory of liquidity preference, decreasing the money supply will nominal interest rates in the short run, and, according to the Fisher effect, decreasing the money supply will nominal interest rates in the long run. A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase 8. If neither investment nor consumption depends on the interest rate, then the IS curve is , and_ policy has no effect on output. A) vertical; monetary B) horizontal; monetary...

  • If money demand does not depend on the interest rate, then the LM curve is ______...

    If money demand does not depend on the interest rate, then the LM curve is ______ and ______ policy has no effect on output. A. horizontal; monetary B. vertical; monetary C. horizontal; fiscal D. vertical; fiscal

  • Suppose that investment (I) and consumption (C) in the goods market is not responsive to the...

    Suppose that investment (I) and consumption (C) in the goods market is not responsive to the interest rate. Then The IS curve is a horizontal line and monetary policy is effective in raising output. The IS curve is a vertical line and monetary policy is effective in raising output. The IS curve is a horizontal line and monetary policy does not affect output in the IS-LM model. The IS curve is a vertical line and monetary policy does not affect...

  • Consumption depends _______ on disposable income, and Investment depends _______ on the real interest rate a) Positively,...

    Consumption depends _______ on disposable income, and Investment depends _______ on the real interest rate a) Positively, positively b) Positively, negatively c) Negatively; negatively d) Negatively, positively

  • Assume that investment spending depends only on the interest rate and no longer depends on output....

    Assume that investment spending depends only on the interest rate and no longer depends on output. Given this information, a decrease in money supply: a. will cause investment to increase. b. may cause investment to increase or decrease. c. will have no effect on output. d. will cause a reduction in output and have no effect on the interest rate. e. will cause investment to decrease.

  • Suppose that autonomous consumption and planned investment in the economy described in problem 5 change to...

    Suppose that autonomous consumption and planned investment in the economy described in problem 5 change to Ca = 470 − 15r and Ip = 1,700 − 60r. All other aspects of the structure of the commodity and the money markets are as described in problem 5.(a) Derive the equation for the new IS curve and verify that the equilibrium interest rate and real output are the same as you computed in parts 5g and 5h, respectively.(b) Calculate the slope of...

  • 6.The Aggregate Demand (AD) curve is obtained by combining: (a) The consumption function, planned investment and...

    6.The Aggregate Demand (AD) curve is obtained by combining: (a) The consumption function, planned investment and the central bank's policy reaction function. (b) The consumption function and the Taylor rule. (c) The equation for PAE, the central bank's policy reaction and Y = PAE. (d) Y=PAE and the consumption function. (e) The equation for planned investment and the central bank policy reaction function. 7.The AD curve is generally assumed to have a negative slope. However, which of the following would...

  • 6. MONETARY AND FISCAL POLICY WITH AN INTEREST RATE TARGET a. What is the slope of...

    6. MONETARY AND FISCAL POLICY WITH AN INTEREST RATE TARGET a. What is the slope of the LM curve when there is an interest rate target? b. What is the intercept of the LM curve when there is an interest rate target? c. If the level of investment responds strongly to the rate of interest, and the central bank is following an interest rate target, draw the consequences for output when the interest rate target is increased. When is fiscal...

  • Determine whether each of the following statements is true or false, and explain why

    Determine whether each of the following statements is true or false, and explain why. For each true statement, discuss the impact of monetary and fiscal policy in that special case.a. If investment does not depend on the interest rate, the LM curve is horizontal.b. If investment does not depend on the interest rate, the IS curve is vertical.c. If money demand does not depend on the interest rate, the IS curve is horizontal.d. If money demand does not depend on...

  • The link from monetary policy to changes in real macroeconomic variables is one that depends: A)...

    The link from monetary policy to changes in real macroeconomic variables is one that depends: A) on the effectiveness of fiscal policy. B) only upon the sensitivity of investment to changes in the interest rate. C) only upon the sensitivity of demand for money to changes in the interest rate. D) upon the sensitivity of both investment and the demand for money to changes in the interest rate.

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT