Multiple Choice
Which of the following illustrates how the investment accelerator works?
A) An increase in government expenditures increases aggregate spending so that Gas-n-Go decides to modernize its gas stations.
B) An increase in government expenditures increases the interest rate so that Gas-n-Go decides to modernize its gas stations.
C) An increase in government expenditures increases the interest rate so that the demand for stocks and bonds issued by Gas-n-Go rises.
D) An increase in government expenditures decreases the interest rate so that Gas-n-Go decides to modernize its gas stations.
Correct Answer:
Verified
Correct Answer:
Verified
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