Which of the Following Illustrates How the Investment Accelerator Works

question 32

Multiple Choice

Which of the following illustrates how the investment accelerator works?

• A)An increase in government expenditures increases the interest rate so that the Burgerville chain of restaurants decides to build fewer new restaurants.
• B)An increase in government expenditures increases aggregate spending so that Burgerville finds it profitable to build more new restaurants.
• C)An increase in government expenditures increases the interest rate so that the demand for stocks and bonds issued by Burgerville increases.
• D)An increase in government expenditures decreases the interest rate so that Burgerville decides to build more new restaurants.

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Definitions:

Nielsen Media Research

A company that measures and analyzes television, radio, and newspaper audiences to provide data on media consumption patterns.

Observation

The act of noticing or perceiving something and registering it as being significant, often used as a method in scientific research.

Competitor Threat

The potential or actual challenge posed by another business or entity that offers similar products or services, impacting market share or profitability.

Cause-Effect Relationships

The principle that every event (effect) has a cause or causes that explain why the event occurred.