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Tidy Tidy
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8 years ago
If money demand is extremely sensitive to changes in the interest rate, the money demand curve becomes almost horizontal. If the Fed expands the money supply under these circumstances, then the interest rate will
A) fall substantially and investment and consumer spending will fall substantially.
B) rise substantially and investment and consumer spending will rise substantially.
C) fall substantially and investment and consumer spending will change very little.
D) change very little and investment and consumer spending will change very little.
Textbook 
Essentials of Economics

Essentials of Economics


Edition: 4th
Authors:
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Repeat after me: 'Calm down. Things are gonna be fine. Things are gonna be all great. Just relax.' Wink Face
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SydnieSydnie
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8 years ago
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#2
8 years ago
I was confident with my answer, glad it was correct.

Oh, and thumbs-up are more than welcome Slight Smile
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