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If We Have a Normal IS-Curve but a Horizontal LM-Curve

Question 11

Multiple Choice

If we have a normal IS-curve but a horizontal LM-curve,


A) fiscal policy is the most effective way to reduce unemployment
B) fiscal policy is at its weakest in reducing unemployment
C) monetary policy can aid fiscal policy in reducing unemployment
D) monetary policy is the most effective way to reduce unemployment
E) neither fiscal nor monetary policy is effective in reducing unemployment

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