Monetary stimulus will fail if
A)Banks are reluctant to lend money.
B)The investment demand curve is fairly flat.
C)The money demand curve is fairly steep.

Question

Quizplus · Accepted Answer

If banks are reluctant to lend money, then the increase in the money supply resulting from monetary stimulus will not translate into an increase in investment and consumption spending, and will thus fail to stimulate the economy.

Monetary Stimulus Will Fail If