Practice mode Money, Interest Rates And Output

If the investment demand curve is vertical, how effective are monetary and fiscal policy?

Correct answer B. Monetary policy is ineffective but fiscal policy is effective

Explanation

A vertical investment curve means investment ignores interest rates, so monetary policy cannot boost it, while fiscal policy faces no crowding out and works fully.

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If the investment demand curve is vertical, how effective are monetary and fiscal policy?

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If the investment demand curve is vertical, how effective are monetary and fiscal policy?

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