Which of the Following Illustrates How the Investment Accelerator Works

question 79

Multiple Choice

Which of the following illustrates how the investment accelerator works?

• A)An increase in government expenditures increases aggregate spending so that SnoozeBargain Co.decides to modernize its motels.
• B)An increase in government expenditures increases the interest rate so that SnoozeBargain Co.decides to modernize its motels.
• C)An increase in government expenditures increases the interest rate so that the demand for stocks and bonds issued by SnoozeBargain Co.rises.
• D)An increase in government expenditures decreases the interest rate so that SnoozeBargain Co.decides to modernize its motels.

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