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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

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 expansionary monetary policy is not always effective at changing Real GDP? Why or why not?

To determine

Expansionary monetary policy and real GDP.

Explanation

The non-existence of the liquidity trap and the interest sensitivity of investment is sufficient to disprove the claim that expansionary monetary is ineffective in changing the real GDP. There can be other factors also which might break ...

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