A Country Initially Has an Equilibrium Real Interest Rate of 4

question 92

Multiple Choice

A country initially has an equilibrium real interest rate of 4 percent and an equilibrium quantity of investment of $2 trillion.The government's budget deficit then increases.According to the crowding-out effect, the

• A) demand for loanable funds curve shifts leftward, the real interest rate falls, and investment increases.
• B) supply of loanable funds curve shifts rightward, the real interest rate rises, and investment increases.
• C) demand for loanable funds curve shifts rightward, the real interest rate falls, and investment increases.
• D) demand for loanable funds curve shifts rightward, the real interest rate rises, and investment decreases.
• E) supply of loanable funds curve shifts leftward, the real interest rate falls, and investment decreases.

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Definitions:

Validity

The degree to which a concept, conclusion, or measurement is well-founded and likely corresponds accurately to the real world.

Reliability

Reliability in social science research refers to the consistency and dependability of measurement tools and methods, ensuring that studies can be replicated and results are stable over time.

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Having parts or elements linked or related closely to each other.

Bell Hooks

An influential cultural critic, feminist theorist, and author known for her work on race, class, and gender.