Explain why each of the following statements is true. Discuss the impact of monetary and fiscal policy
Question:
a. If investment does not depend on the interest rate, the IS curve is vertical.
b. If money demand does not depend on the interest rate, the LM curve is vertical.
c. If money demand does not depend on income, the LM curve is horizontal.
d. If money demand is extremely sensitive to the interest rate, the LM curve is horizontal.
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Step by Step Answer:
a The IS curve represents the relationship between the interest rate and the level of income that arises from equilibrium in the market for goods and services That is it describes the combinations of ...View the full answer
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Related Book For 
Macroeconomics
ISBN: 978-1464168505
5th Canadian Edition
Authors: N. Gregory Mankiw, William M. Scarth
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