Which Statement Best Illustrates How the Investment Accelerator Works

question 90

Multiple Choice

Which statement best illustrates how the investment accelerator works?

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

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Definitions:

Psychologist

A professional who studies mental processes and behaviors, often specializing in research, diagnosis, and treatment of mental disorders.

Behaviour Modification

Behaviour Modification involves changing specific unwanted behaviors using principles of learning, such as reinforcement and punishment.

Study Goals

Specific objectives or targets that a person aims to achieve through academic study.

Hypothesis

A supposition or proposed explanation made based on limited evidence as a starting point for further investigation.