How does an increase in government spending affect the interest rate and Aggregate Demand according to the Crowding Out Effect?

a.it decreases the interest rate and so decreases consumption and investment spending

b.it increases the interest rate and so decreases consumption and investment spending

c.it decreases the interest rate and so increases consumption and investment spending

d.it increases the interest rate and so increases consumption and investment spending

Suppose that the interest rate falls from 6% to 3%, what does this imply for the opportunity cost of holding money and the quantity of money demanded?

a.the opportunity cost of holding money decreases, and the quantity of money demanded decreases.

b.the opportunity cost of holding money decreases, and the quantity of money demanded increases.

c.the opportunity cost of holding money increases, and the quantity of money demanded increases.

d.the opportunity cost of holding money increases, and the quantity of money demanded decreases.

What happens to the price level and output in the aggregate demand and aggregate supply model when there is a permanent improvement in the level of technology?

a.the price level is unchanged, but output rises

b.the price level falls, but output is unchanged

c.the price level falls, but output rises

d.the price level and output both increase

How is an increase in government spending represented in the aggregate demand and aggregate supply model?

a.by an outwards shift in the aggregate supply curve

b.by an outwards shift in the aggregate demand curve

c.by a movement along a given aggregate demand curve

d.by an inwards shift in the aggregate demand curve