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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Definitions:

Radio

A technology that uses radio waves to carry information, such as sound, by systematically modulating properties of electromagnetic energy waves transmitted through space.

Comparative Advantage

The ability of an individual or economy to produce goods or services at a lower opportunity cost than others, which forms the basis for trade.

Radios

Radios are devices that receive and transmit signals using radio waves to enable wireless communication over distances.

Opportunity Cost

The value of the next best alternative that must be forgone as a result of choosing one option over another.