The Accelerator Theory Can Explain the Paradox That Both Interest

question 79

Multiple Choice

The accelerator theory can explain the paradox that both interest rates and investment rise and fall in concert during the business cycle if

• A)the effect of changes in Y effect on In dominate the effect of interest rates on investment.
• B)the LM curve is constant.
• C)the IS curve is constant.
• D)the effect of changes in interest rates on In dominate the effect of changes in Y on In.

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