Suppose it were proved that liquidity traps do not occur and that investment is not interest insensitive. Would this be enough to disprove the claim that expanisonary monetary policy is not always effective at changing Real GDP? Why or why not?

Suppose the economy has just entered a downturn due to a decrease in investment spending. While of the following actions could a central bank take to successfully counteract the downturn? a) Increase capital investment spending on the part of government agencies. b) Issue treasury bills in order to lower the interest rate. c) Buy back treasury bills in order to lower the interest rate. d) Buy back treasury bills in order to raise the interest rate. e) Lower the tax rate on real estate and capital gains assets

we make use of the general monetary model here, where L is no longer assumed constant, and money demand is inversely related to the nominal interest rate. Recall from that earlier question inflation rate in Korea is = 10% and inflation rate in Japan is = 0%. In addition, assume that the bank deposits in Japan pay 2% interest rate (i¥ = 2%).   Compute the interest rate paid on South Korean won deposits (iwon).           Using the definition of the real interest rate, show that the real interest rate in South Korea (rwon) is equal to the real interest rate in Japan (r¥)           Suppose the Bank of Korea decreases the money growth rate from 15% to 10% and the inflation rate falls proportionately (one for one) with this decrease. If the nominal interest rate in Japan remains unchanged, what happens to the interest rate paid on Korean won deposits?               Using time series diagrams (impulse graphs), illustrate how this decrease in the money growth rate affects South Korea’s…

To encourage spending to offset a lower demand for goods and services, the government will implement easy monetary policy by increasing the interest rates to encourage more savings. * TRUE or FALSE?