Macro- & Monetary Economics

Prio: Normal, Part II: Keynes, Type: MC, Quiz 2

In Keynesian theory (sticky wage model), fiscal policy is a more effective stabilization tool than monetary policy if

  • investment is very sensitive to changes in the interest rate
     
  • investment is not very sensitive to changes in the interest rate
     
  • investment is very sensitive to changes in the price level
     
  • investment is not very sensitive to changes in the price level
 

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