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 Burgerville chain of restaurants decides to build fewer new restaurants.
B) An increase in government expenditures increases aggregate spending so that Burgerville finds it profitable to build more new restaurants.
C) An increase in government expenditures increases the interest rate so that the demand for stocks and bonds issued by Burgerville increases.
D) An increase in government expenditures decreases the interest rate so that Burgerville decides to build more new restaurants.
Correct Answer:
Verified
Correct Answer:
Verified
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