Multiple Choice
According to the model a permanent decrease in government purchases does not decrease the real interest rate according to the market clearing model because:
A) the supply of capital services and demand for capital services decrease about the same amount.
B) neither demand for capital services nor supply of capital services shift due to the permanent increase in government purchases.
C) the demand for capital services is downward sloping.
D) the supply of capital services is upward sloping.
Correct Answer:
Verified
Correct Answer:
Verified
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