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:

Neuron

A specialized cell transmitting nerve impulses; a nerve cell, which is the fundamental unit of the nervous system enabling communication throughout the body.

Nervous System

A complex network of nerves and cells that transmit signals between different parts of the body.

Carcinoma

Carcinoma is a type of cancer that begins in the skin or in tissues that line or cover internal organs.

Myelin Sheath

A fatty layer that surrounds the axon of some neurons, increasing the speed at which electrical impulses propagate along the nerve cell.