If We Were to Change the Interpretation of the Term

question 19

Multiple Choice

If we were to change the interpretation of the term "loanable funds" in such a way that government budget deficits would affect the demand for loanable funds, rather than the supply of loanable funds, then

• A)crowding out would not be a consequence of an increase in the budget deficit.
• B)higher interest rates would not be a consequence of an increase in the budget deficit.
• C)an increase in the budget deficit would cause the demand for loanable funds to decrease.
• D)we would be making only a semantic change in how we analyze the effects of government budget deficits.

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Definitions:

Experimental Method

A method of determining whether variables are related, in which the researcher manipulates the independent variable conceptually similar to a dependent variable and controls all other variables either by randomization or by directexperimental control.

Variables Manipulation

The process of altering or changing variables within an experiment to observe their effects on other variables.

Internal Validity

The degree to which a study establishes a trustworthy cause-and-effect relationship between a treatment and an outcome.

Variable Changes

Alterations in the value or status of variables within an experiment or study.