Question

In: Economics

One feature of the income-expenditure model is that: A. investment depends on interest rates and there...

One feature of the income-expenditure model is that:

A. investment depends on interest rates and there is crowding out

B. investment does not depend on interest rates and there is no crowding out

C. investment depends on interest rates and there is no crowding out

D. investment does not depend on interest rates and there is no crowding out

Solutions

Expert Solution

in the income expenditure model the investment doesn't depend on the interest rate and there is no crowding out, an increase in the investment just shifts the AE curve upward and increase the output with multiplier. the answer is "D" (b and D are both same options. )

Rahul Sunny answered 2 years ago
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