Question :
36. Which of the following illustrates how the investment accelerator : 2092459
36. Which of the following illustrates how the investment accelerator works?
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a. |
An increase in government expenditures increases the interest rate so that the Burgerville chain of restaurants decides to build fewer new restaurants. |
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b. |
An increase in government expenditures increases aggregate spending so that Burgerville finds it profitable to build more new restaurants. |
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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. |
37. Which of the following illustrates how the investment accelerator works?
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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. |
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c. |
An increase in government expenditures increases the interest rate so that the demand for stocks and bonds issued by Gas-n-Go rises. |
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d. |
An increase in government expenditures decreases the interest rate so that Gas-n-Go decides to modernize its gas stations. |
38. The positive feedback from aggregate demand to investment is called
|
a. |
the investment multiplier. |
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b. |
the stock-market effect. |
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c. |
the investment accelerator. |
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d. |
the crowding-in multiplier. |
39. The change in aggregate demand that results from fiscal expansion changing the interest rate is called the
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a. |
multiplier effect. |
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b. |
crowding-out effect. |
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c. |
accelerator effect. |
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d. |
Ricardian equivalence effect. |
40. Which of the following correctly explains the crowding-out effect?
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a. |
An increase in government expenditures decreases the interest rate and so increases investment spending. |
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b. |
An increase in government expenditures increases the interest rate and so reduces investment spending. |
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c. |
A decrease in government expenditures increases the interest rate and so increases investment spending. |
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d. |
A decrease in government expenditures decreases the interest rate and so reduces investment spending. |
