An Increase in the Real Interest Rate

Multiple Choice

An increase in the real interest rate

A) causes the nongovernment share of GDP line to shift to the right.
B) causes the nongovernment share of GDP line to shift to the left.
C) causes a downward movement along the nongovernment share line.
D) causes an upward movement along the nongovernment share line.
E) has an indeterminate effect on nongovernment expenditures since some nongovernment expenditures are positively related to the interest rate while others exhibit a negative relationship.