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If an Increase in Government Spending Causes an Increase in Government

Question 250

Multiple Choice

If an increase in government spending causes an increase in government borrowing, this could induce


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.

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