Assuming that the money demand function depends on income, the interest rate and the price level as presented in class, then if planned investment decreases as the interest rate increases, the size of the government spending multiplier for expansionary fiscal policy will be________ than it was when we ignored the money market. a)exactly the same b)larger c)smaller

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A: The correct answer is given in the second step.

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A: Answer - Thank you for submitting the questions but, we are authorized to solve one question at a…

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A:

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A: Have no effect on aggregate demand --- is correct

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