For This Question,assume That Investment Spending Depends Only on Output

question 45

Multiple Choice

For this question,assume that investment spending depends only on output and no longer depends on the interest rate.Given this information,an increase in government spending

• A)will cause investment to decrease.
• B)will cause investment to increase.
• C)may cause investment to increase or to decrease.
• D)will have no effect on output.
• E) will cause an increase in output and have no effect on the interest rate.

---

Definitions:

Callable Bonds

Bonds that can be redeemed by the issuer before their maturity date at a predetermined price.

Redemption Provision

A clause in a bond or other fixed-income security that allows the issuer to repurchase and retire its bonds before the maturity date.

Unsecured Bonds

Bonds issued without collateral, relying solely on the issuer's creditworthiness.

Debentures

A type of long-term debt instrument used by corporations and governments to raise funds, not secured by physical assets or collateral.