If Private Sector Investment Does Not Respond Much to Interest

question 155

Multiple Choice

If private sector investment does not respond much to interest rate changes, then

• A) there will be more crowding out when expansionary policies are undertaken.
• B) there will be less crowding out when expansionary policies are undertaken.
• C) fiscal policy will be less effective than monetary policy.
• D) monetary policy will be more effective than fiscal policy.

---

Definitions:

Pronoun

A word used in place of a noun or noun phrase to avoid repetition and manage coherence within text.

Noun Clause

A dependent clause that functions as a noun within a larger sentence, often starting with words like "that," "whom," or "where."

Restrictive

Pertains to a limiting or controlling condition or rule.

Nonrestrictive

Descriptive text that provides additional information but is not essential to the meaning of the sentence.