Assume There Is an Increase in Government Spending fiNanced by Government

question 47

Multiple Choice

Assume there is an increase in government spending financed by government borrowing. With a specific money supply, the consequent

• A) contractionary impact might be lessened by the resulting increase in the interest rate.
• B) expansionary impact might be lessened by the resulting increase in the interest rate.
• C) contractionary impact might be enhanced by the resulting decline in the interest rate.
• D) expansionary impact might be enhanced by the resulting decline in the interest rate.

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