For This Question, Assume That the Economy Is Initially Operating

Multiple Choice

For this question, assume that the economy is initially operating at the natural level of output. A fiscal contraction must cause:

A) an increase in investment in the short run.
B) a decrease in investment in the short run.
C) no change in investment in the medium run.
D) no change in investment in the short run.
E) an increase in investment in the medium run.