1. (True, false or uncertain) According to (Traditional) Keynesians, money demand is sensitive to the interest rate, which means the LM curve is relatively flat and fiscal policy is relatively potent for short term policy intervention on
GDP. 2. (True, false or uncertain) According to Monetarists, if an economy is in the steady state, then allowing the money supply to grow at the rate of n + g + ng
will ensure that there will be price stability.