Economics · Macroeconomics

The fiscal policy multiplier is larger in the Keynesian IS-LM model when:

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1The LM curve is vertical
2The demand for money is more interest-elastic✓
3The demand for investment goods is more interest-elastic
4The demand for money is less interest-elastic

Correct answer

The demand for money is more interest-elastic

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The fiscal policy multiplier is larger in the Keynesian IS-LM model when:

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