time lag 33. If an increase in government spending causes an increase in government borrowing, this could induce/cause: (a) An increase in interest rates, which would cause private domestic investment to fall. (b) An increase in interest rates, which would cause private domestic investment to rise. (c) An increase in interest rates but no effect on private domestic investment. (d) A decrease in interest rates, which would cause private domestic investment to rise.

time lag 33. If an increase in government spending causes an increase in government borrowing, this could induce/cause: (a) An increase in interest rates, which would cause private domestic investment to fall. (b) An increase in interest rates, which would cause private domestic investment to rise. (c) An increase in interest rates but no effect on private domestic investment. (d) A decrease in interest rates, which would cause private domestic investment to rise.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: Savings,investment And The Financial System

Section: Chapter Questions

Problem 9PA

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