A Temporary Increase in Government Purchases Would ________ the Domestic

question 76

Multiple Choice

A temporary increase in government purchases would ________ the domestic real interest rate and ________ net desired saving (desired saving less desired investment) in the economy.

• A)lower; increase
• B)lower; decrease
• C)raise; increase
• D)raise; decrease

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Definitions:

Quantity Demanded

The aggregate quantity of a product or service that buyers are ready and capable of buying at a certain price during a defined time frame.

Demand

The willingness and financial capacity of individuals to buy goods and services at certain price levels.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, resulting in a stable market condition.

Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the equilibrium price in a market.