Refer to the above figure. Suppose that the economy initially is operating along AD1
If the government seeks to close the recessionary gap by raising government spending without any change in taxation, which moves the aggregate demand curve from AD1 to AD2, then to AD3. Which of the following scenarios is TRUE?
A) Interest rates fall and investment rises.
B) Both interest rates and investment fall.
C) Both interest rates and investment rise.
D) Interest rates rise and investment falls.
Answer: D) Interest rates rise and investment falls.
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In the 1980s and 1990s, average per capita income increased by a greater percentage in sub-Saharan Africa than it did in the rest of the world
Indicate whether the statement is true or false
A bank with some monopoly power may be able to __________ the rate on its deposits and so __________ its net interest income
A) lower, lower B) lower, raise C) raise, lower D) raise, raise
"The United States should adopt more open trade policies because they historically have caused increased economic growth." This is an example of what kind of statement?
A. Unequivocally true B. Normative C. Positive D. Unequivocally false
After the United States introduces a tariff in the market for widgets, the price of widgets in the United States will: Incorrect Response
A. decrease. B. increase. C. remain the same. D. change in an indeterminate manner.