Ask Question
7 November, 09:07

A decrease in government spending (this question is Extra credit) a. increases the interest rate and so decreases investment spending decreases. b. increases the interest rate and so investment spending increases. c. decreases the interest rate and so investment spending increases. d. decreases the interest rate and so investment spending decreases.

+4
Answers (1)
  1. 7 November, 12:51
    0
    b. increases the interest rate and so investment spending increases.

    Explanation:

    According to the IS-LM framework,

    An increase in government spending shifts IS upward resulting in higher interest rate as well as GDP. The higher interest rate will hamper investment spending.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “A decrease in government spending (this question is Extra credit) a. increases the interest rate and so decreases investment spending ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers