If money demand is infinite below some certain r eg r

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Intermediate Financial Management
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Chapter 16 / Exercise 010
Intermediate Financial Management
Brigham/Daves
Expert Verified
88.If money demand is infinite below some certain r(e.g., r*) and zero above r*, then the LMcurve is ______ and ______ policy has no effect on output.A)vertical; fiscalB)horizontal; fiscalC)vertical; monetaryD)horizontal; monetary
89.A liquidity trap occurs when:
90.If a liquidity trap does exist, then ______ policy will not be effective in increasing income when interest rates reach very ______ levels.
91.If expected inflation equals 3 percent and monetary policymakers push the nominal interest rate to 1 percent, the real interest rate equals ______ percent.
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Intermediate Financial Management
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Chapter 16 / Exercise 010
Intermediate Financial Management
Brigham/Daves
Expert Verified
92.According to the ISLMmodel, when the government increases taxes and government purchases by equal amounts:A)income, the interest rate, consumption, and investment are unchanged.B)income and the interest rate rise, whereas consumption and investment fall.C)income and the interest rate fall, whereas consumption and interest rise.D)income, the interest rate, consumption, and investment all rise.
93.If the government wants to raise investment but keep output constant, it should:
94.A tax cut combined with tight money, as was the case both in the United Kingdom and the United States in the early 1980s, should lead to a:
95.An increase in the money supply:

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