According to JM Keynes, sometimes monetary policy is ineffective. The supply of money (MS) is assumed to be controlled by the central bank. The demand for money is LP and there has been an increase in real income in the economy.
In the diagram which position makes monetary policy ineffective?
[Figure 23.1]
A A
B B
C C
D D

Q: What topic does this question test?

This question tests Monetary Policy in A-Level Economics (syllabus code 9708). It is worth 1 mark.

Q: Which exam paper is this question from?

This question appeared in the Cambridge A-Level Economics May/June 2018 examination, Paper 3 Variant 1 (9708_s18_qp_31.pdf).

Question

According to JM Keynes, sometimes monetary policy is ineffective. The supply of money (MS) is assumed to be controlled by the central bank. The demand for money is LP and there has been an increase in real income in the economy.
In the diagram which position makes monetary policy ineffective?
[Figure 23.1]
A A
B B
C C
D D

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