Use the Model Developed in Chapter 3, but Assume That

question 9

Multiple Choice

Use the model developed in Chapter 3, but assume that consumption decreases, other things being equal, when the interest rate rises. If there is a technological advance that leads to an increase in investment demand:

• A) investment increases and the interest rate rises.
• B) investment is unchanged and the interest rate rises.
• C) investment and the interest rate are both unchanged.
• D) investment decreases and the interest rate rises.

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Definitions:

General McClellan

A major general during the American Civil War, known for his cautious approach and conflict with President Abraham Lincoln.

Richmond

Richmond is the capital city of the Commonwealth of Virginia in the United States, known for its historical significance in American history.

Copperheads

A faction of Northern Democrats in the Union who opposed the Civil War and wished for an immediate peace settlement with the Confederates.