Keynes argued that monetary policy was ineffective during the Great Depression because (A) IS curve was vertical and stuck at a low level of income. (B) both the IS and the LM curves were vertical. (C) IS curve was continuously shifting, while the LM curve was vertical. (D) None of the above choices is correct.

DSE 2005 Question 27: IS-LM model

Keynes argued that monetary policy was ineffective during the Great Depression because

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IS-LM model has come up 137 times in 7 exams since 2004.

This question is on Policy mix and relative effectiveness, part of IS-LM model in Macroeconomics.

Comparing fiscal and monetary policy and combining them to hit income and interest targets.

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