An increase in government spending raises income:

a. and the interest rate in the short run, but leaves both unchanged in the long run.

b. in the short run, but leaves it unchanged in the long run, while lowering investment.

c. in the short run, but leaves it unchanged in the long run, while lowering consumption.

d. and the interest rate in both the short and long runs.

Answer rating: 100% (QA)

Option B When the government spending increases as a result of an Expansionary fiscal policy ... View the full answer