If Investment Becomes More Responsive to Changes in the Interest

question 47

Multiple Choice

If investment becomes more responsive to changes in the interest rate, then

• A)the size of the government spending multiplier will increase
• B)a given increase in the interest rate will lead to a larger increase in income
• C)the IS-curve will become flatter
• D)the IS-curve will become steeper
• E)both A and C

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Definitions:

Public Policy

A system of laws, regulatory measures, courses of action, and funding priorities set by governmental entities or its representatives.

Illegal Profits

Earnings obtained through activities that are unlawful or against regulatory guidelines.

Hijack

The act of unlawfully seizing control of a vehicle, such as an airplane or ship, often to demand a ransom or achieve a political goal.

Competing Clause

Often referred to as a non-compete clause, it is a contract provision that restricts one party's ability to enter into or start a similar profession or trade in competition against another party.