Multiple Choice
Which of the following sequence of events occurs in response to an expansionary fiscal policy?
A) Real GDP increases, causing money demand to increase, causing interest rates to increase and investment to decrease.
B) Real GDP decreases, causing the demand for money to increase, causing interest rates to increase and investment to increase.
C) Real GDP increases, causing money demand to increase, causing interest rates to decrease and investment to increase.
D) Real GDP increases, causing money demand to decrease, causing the interest rate to decrease and investment to increase.
Correct Answer:
Verified
Correct Answer:
Verified
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