Answered step by step
Verified Expert Solution
Question
1 Approved Answer
1.In the IS/LM model, when the central bank targets an interest rate the LM schedule is flat. In such a case fiscal policy would be
1.In the IS/LM model, when the central bank targets an interest rate the LM schedule is flat. In such a case fiscal policy would be ineffective as government spending is entirely crowding out investment demand.
Is this statement true or false and explain why
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started