An Increase in Investment Spending Caused by a Decline in the Real

question 76

Multiple Choice

An increase in investment spending caused by a decline in the real interest rate will:

• A)shift the aggregate supply curve to the left
• B)move the economy up along the existing aggregate demand curve
• C)shift the aggregate demand curve to the left
• D)shift the aggregate supply curve to the right
• E)shift the aggregate demand curve to the right

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Definitions:

Market for Loanable Funds

A theoretical financial market where borrowers and lenders interact, with the loan interest rate being determined by supply and demand for funds.

Capital Investment

The purchase of goods or services by a firm to add to its fixed assets to increase its capacity or efficiency in producing goods or services.

Consumption

The use of goods and services by households, one of the major components of an economy’s gross domestic product, indicating economic health and consumer confidence.

Term of a Bond

The length of time until a bond's maturity date, when the principal amount of the bond is due to be paid to the bondholder.