Question:
The maximum value of the monetary policy multiplier is _____(where b implies sensitivity of planned investment spending to interest rate, c implies marginal propensity to consume and t = marginal tax rate, k implies sensitivity of money demand to interest rate).
The maximum value of the monetary policy multiplier is _____(where b implies sensitivity of planned investment spending to interest rate, c implies marginal propensity to consume and t = marginal tax rate, k implies sensitivity of money demand to interest rate).
Updated On: Mar 11, 2024
- \(\frac{b}{1-c(1-t)}\)
- \(\frac{k}{1-c(1-t)}\)
- \(\frac{1}{k}\)
- \(\frac{1}{b}\)
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The Correct Option is C
Solution and Explanation
The correct option is(C): \(\frac{1}{k}\)
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