Which of the Following Illustrates How the Investment Accelerator Works

question 32

Multiple Choice

Which of the following illustrates how the investment accelerator works?

• A)An increase in government expenditures increases the interest rate so that the Burgerville chain of restaurants decides to build fewer new restaurants.
• B)An increase in government expenditures increases aggregate spending so that Burgerville finds it profitable to build more new restaurants.
• C)An increase in government expenditures increases the interest rate so that the demand for stocks and bonds issued by Burgerville increases.
• D)An increase in government expenditures decreases the interest rate so that Burgerville decides to build more new restaurants.

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Definitions:

Probability

The quantification of the chance that a specific outcome or event will take place.

Catch Fish

The act of capturing fish either for personal consumption, sport, or commercial purposes, typically using tools like nets, fishing rods, or traps.

Random Variable

A variable whose values are determined by the occurrences of an unpredictable event.

Occurrences

The instances or frequencies at which a specific event or outcome is observed.