Refer to the Above Diagram

question 184

Multiple Choice

Refer to the above diagram.Initially assume that the investment demand curve is I_d1.Which of the following effects of a budget deficit might shift the investment demand curve from I_d1 to I_d2, wholly offsetting any crowding-out effect?

• A)an improvement in profit expectations by businesses
• B)a decrease in saving
• C)a decline in the interest rate
• D)an increase in the marginal propensity to consume

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Definitions:

Shading

In art, shading refers to the technique of adding depth or solidity to an image through the use of variations in tone or color.

Logical Equivalent

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Immediate Inference

A conclusion directly drawn from a single premise without any need for additional evidence or argument.

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