Which Statement Best Illustrates How the Investment Accelerator Works for the Sleepwell

Multiple Choice

Which statement best illustrates how the investment accelerator works for the Sleepwell Hotel chain?

A) an increase in government expenditures increases the interest rate so that the chain decides to build fewer new hotels
B) an increase in government expenditures increases aggregate spending so that the chain finds it profitable to build more new hotels
C) an increase in government expenditures increases the interest rate so that the demand for stocks and bonds issued by the chain rises
D) an increase in government expenditures decreases the interest rate so that the chain decides to build more new hotels