If the Economic Growth Rate SLOWS from 5% to 1%,the

question 42

Multiple Choice

If the economic growth rate SLOWS from 5% to 1%,the simple accelerator hypothesis suggests that

• A)investment will continue to rise as output increases.
• B)investment will fall as output increases.
• C)investment will accelerate since output growth is positive.
• D)None of the above is correct.

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Definitions:

Semi-Annually

Occurring or done twice a year, typically every six months.

Face Value

The nominal or dollar value stated on a security or financial instrument, such as a bond or stock, representing its worth at issuance or par value.

Interest Rate Risk

The risk of investment value changes due to variations in the level of interest rates.

Zero-Coupon

A bond that does not pay periodic interest and is issued at a substantial discount from its face value.