Government expenditure is believed to decrease investment primarily by causing a rise in which of the following?

Multiple choice question for Money, Interest Rates And Output. Select an option, then review the explanation below.

Explanation

Increased government spending can lead to higher borrowing costs, or interest rates, which tends to discourage private investment. The other options such as incomes, foreign investments, imports, and taxes do not directly explain the reduction in investment caused by government expenditure.

Practice related questions from the same subject.

1.How does a decrease in interest rates affect the monetary base, consumer credit availability, and the cost of consumer credit?
2.Which variable do central banks typically set directly, and which variable adjusts as a consequence?
3.What is it called when the central bank purchases financial assets in the open market to expand the monetary base?
4.M4 is considered a __________ monetary aggregate and encompasses deposits held at both __________ and __________?
5.Assuming all other factors remain constant, what happens to the quantity of real money holdings when interest rates increase?

Government expenditure is believed to decrease investment primarily by causing a rise in which of the following?

Explanation

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