When Government Expenditures Increase,the Interest Rate

question 88

Multiple Choice

When government expenditures increase,the interest rate

• A)increases,making the change in aggregate demand larger.
• B)increases,making the change in aggregate demand smaller
• C)decreases,making the change in aggregate demand larger.
• D)decreases,making the change in aggregate demand smaller.

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Definitions:

Gross Saving Rate

The proportion of total national income that is not spent on consumption or taxes, indicating the amount saved.

Gross National Income

An economic metric that totals the domestic and foreign output of residents of a country, including product taxes and minus subsidies not included in the valuation of output.

APC

Average Propensity to Consume, which measures the fraction of income spent on consumption out of the total income.

Disposable Income

Financial endowment to households for the purpose of spending and saving after mandatory tax deductions.