Suppose There Is an Increase in Government Spending

question 2

Multiple Choice

Suppose there is an increase in government spending.Such a fiscal policy action will cause

• A)the natural real interest rate to rise
• B)the natural real interest rate to fall
• C)ambiguous effects on the natural real interest rate
• D)no effect on the natural real interest rate

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Definitions:

Plate Tectonics

The scientific theory explaining the movement of the Earth's lithosphere through processes such as spreading, subduction, and collision, which results in the formation of mountains, earthquakes, and volcanoes.

USGS Geologist

A scientist specializing in the study of the Earth and its processes, who works for the United States Geological Survey.

Oceanic Crust

The relatively thin part of the Earth's crust that underlies the ocean basins, composed of dense basaltic rock.

Seismic Tomography

A technique for imaging the Earth's interior by analyzing differences in the speed of seismic waves as they travel through different materials.