In a Closed Economy, If Y, C, and T Remained

question 404

Multiple Choice

In a closed economy, if Y, C, and T remained the same, an increase in G would reduce

• A)private saving and public saving.
• B)private saving but not public saving.
• C)public saving but not private saving.
• D)neither private nor public saving.

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Definitions:

Nominal Interest Rate

The stated interest rate of a bond or loan, which does not account for inflation or the compounding of interest.

Bond Yield

The return an investor realizes on a bond, calculated as the annual interest payment divided by the bond's current market price.

Face Value

Face value refers to the nominal or dollar value printed on a security or financial instrument, such as a bond or stock certificate.

Principal Amount

The initial size of a loan or debt on which interest is calculated, or the original investment amount in a financial instrument.