In the Market Clearing Model the Intertemporal Substitution Effect from a Permanent

question 23

Multiple Choice

In the market clearing model the intertemporal substitution effect from a permanent increase in government purchases:

• A)works through real interest rate changes.
• B)works through real wage changes.
• C)works through real interest rate and real wage changes.
• D)does not exist because the real interest rate and real wage rated do not change.