Question
2. Suppose money demand is very sensitive to the change in the interest rate, (a) How does this affect the LM curve? (10 marks) (b)
2. Suppose money demand is very sensitive to the change in the interest rate,
(a) How does this affect the LM curve? (10 marks)
(b) Does this have any impact on the effectiveness of monetary policy and fiscal policy? (20 marks)
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Macroeconomics Principles Applications and Tools
Authors: Arthur O'Sullivan, Steven Sheffrin, Stephen Perez
9th edition
978-0134089027, 134089022, 978-0134420684
