Ask Question
27 March, 19:33

A decrease in government spending

a. decreases the interest rate and so investment spending increases.

b. decreases the interest rate and so investment spending decreases.

c. increases the interest rate and so investment spending increases.

d. increases the interest rate and so decreases investment spending decreases.

+2
Answers (1)
  1. 27 March, 22:44
    0
    a. decreases the interest rate and so investment spending increases.

    Explanation:

    An increase in government spending has a crowd-out effect on the economy as interest rate rises since government borrows more than many businesses in terms of size and volume. The opposite effect results when government spending decreases.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “A decrease in government spending a. decreases the interest rate and so investment spending increases. b. decreases the interest rate and ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers