14. (Money and Aggregate Demand) Would each of the following increase, decrease, or have no impact on the ability of open-market operations to affect aggregate demand?
Explain your answer.
a. Investment demand becomes less sensitive to changes in the interest rate.
b. The marginal propensity to consume rises.
c. The money multiplier rises.
d. Banks desire to hold additional excess reserves.
e. The demand for money becomes more sensitive to changes in the interest rate.
a. It will have less impact on aggregate demand as investment demand will change in less proportion than change in open market ...
This discusses the concept of Money and Aggregate demand
Macroeconomics: Demand Curves
A reduction in the demand for money is the equivalent of a(n) ______ in velocity and will shift the aggregate demand curve to the _______View Full Posting Details