A Decrease in Autonomous Investment

question 17

Multiple Choice

A decrease in autonomous investment

• A)results in a shift of the IS-curve to the left
• B)results in a shift of the IS-curve to the right
• C)occurs as we move along the IS-curve from right to left
• D)occurs as we move along the IS-curve from left to right
• E)is caused by an increase in government expenditures

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Definitions:

Excess Reserves

The reserves held by banks over and above the minimum required by the central bank, available for lending or investment.

Money Supply

The total financial resources existing in an economy at a certain time.

Open Market Operations

These are financial activities where central banks buy or sell government securities in the open market to control the money supply and influence interest rates.

Required Reserve Ratio

The fraction of deposits that a bank is mandated by regulations to hold in reserve and not loan out.