If Interest Rates Adjust to Equate Savings and Investment, Then

question 83

Multiple Choice

If interest rates adjust to equate savings and investment, then an expansionary fiscal policy is:

• A)more likely to increase interest rates and less likely to crowd out investment.
• B)more likely to increase interest rates and more likely to crowd out investment.
• C)less likely to increase interest rates and less likely to crowd out investment.
• D)less likely to increase interest rates and more likely to crowd out investment.

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Definitions:

Simple Interest

Interest earned or paid on the initial principal amount of an investment or loan.

Exact Interest

A method of calculating interest based on a 365-day year or the actual number of days in a year.

365-Day Year

A method used in finance that assumes a year has 365 days and is used for calculating interest rates or other financial metrics.

Total Amount

The complete sum of money required or received, often including principal, interest, taxes, and fees.