A Decrease in Government Spending and the Enactment of an Investment

question 184

Multiple Choice

A decrease in government spending and the enactment of an investment tax credit would definitely cause

• A)the quantity of loanable funds traded to increase.
• B)the interest rate to increase.
• C)the quantity of loanable funds traded to decrease.
• D)the interest rate to decrease.

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Definitions:

Natural Rate

Often referred to in the context of unemployment, it is the long-term rate of unemployment that an economy experiences even when it is operating at a full capacity.

Natural Rate

The long-term unemployment rate that is observed once the effect of short-term cyclical factors has been removed and is thought to be due to structural factors in the economy.

Bureau of Labor Statistics

A government agency that collects, analyzes, and disseminates essential economic information to support public and private decision-making.

Natural Rate

The rate of any economic variable, such as unemployment or interest, believed to be inherent when the economy is in equilibrium.