Assume That Investment Spending Depends Only on Output and No

question 81

Multiple Choice

Assume that investment spending depends only on output and no longer depends on the interest rate. Given this information, an increase in government spending:

• A) will cause investment to increase.
• B) may cause investment to increase or to decrease.
• C) will have no effect on investment.
• D) will cause an increase in investment if the interest rate decreases.
• E) will cause investment to decrease.

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