Hi All,
Can someone explain the below? I just cannot seem to see why investment expenditure is sensitive and the rest is insensitive.
The AD curve will be flatter (small changes in price cause relatively large changes in quantity demanded) if:
- Investment expenditure is highly sensitive to the interest rate:
- Saving is insensitive to income
- Money demand is insensitive to interest rates
- Money demand is insensitive to income
Thank you!