Higher Interest Rates And, Therefore, a Decrease in Investment Spending

question 117

Multiple Choice

Higher interest rates and, therefore, a decrease in investment spending is most likely to be caused by which policy mix?

• A)deficit reduction and expansionary monetary policy 
• B)larger deficits and contractionary monetary policy 
• C)larger deficits and expansionary monetary policy 
• D)deficit reduction and contractionary monetary policy

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Definitions:

Economic Policies

Government measures applied to control the economy of a country, including fiscal policy, monetary policy, and trade policy.

National Debt

The total amount of money that a country's government has borrowed, by various means.

Budget Deficit

The financial shortfall when a government's expenditures exceed its revenues within a given fiscal period, leading to borrowing or debt accumulation.

Economic Crises

Periods of significant decline in economic activity spread across the economy, lasting more than a few months, and are normally visible in real GDP, real income, employment, industrial production.