Which of the Following Illustrates How the Investment Accelerator Works

Multiple Choice

Which of the following illustrates how the investment accelerator works?

A) An increase in government expenditures increases the interest rate so that the Sleepwell Hotel chain decides to build fewer new hotels.
B) An increase in government expenditures increases aggregate spending so that the Sleepwell Hotel 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 Sleepwell Hotel chain rises.
D) An increase in government expenditures decreases the interest rate so that the Sleepwell Hotel chain decides to build more new hotels.