Use the Model Developed in Chapter 3 and Assume That

question 129

Multiple Choice

Use the model developed in Chapter 3 and assume that consumption does not depend on the interest rate. In this case, when the government lowers taxes on business investment, thus increasing desired investment, but does not change government spending or change any taxes that
Affect disposable income:

• 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:

Gifford Pinchot

An American forester and politician who served as the first Chief of the US Forest Service and was a key figure in the conservation movement.

Scientific Forestry

A method of managing forests based on principles of conservation and sustainability, often through the application of scientific research.

France and Germany

Two major European countries with a complex history of rivalry and cooperation, playing significant roles in European politics and the development of the European Union.

Poland

A country located in Central Europe, known for its historical heritage, cultural contributions, and resilience through periods of conflict and division.