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Unformatted text preview: monetary policy (fiscal policy) actions Policy Effectiveness: The Elasticity of Money Demand and Investment The IS curve is steep when interest elasticity of investment is low. Therefore, fiscal policy is more effective when interest rates are not an important factor in investment decisions. The LM curve is steep when interest elasticity of money demand is low. Therefore, monetary policy is more effective when speculative demand is not an important reason for holding money....
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This note was uploaded on 05/03/2009 for the course ECON 332 taught by Professor Drabicki during the Spring '08 term at University of Arizona Tucson.
 Spring '08
 DRABICKI
 Macroeconomics, Fiscal Policy, Monetary Policy

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