In a closed economy, a temporary increase in government expenditure will shift the investment curve to the left and decrease equilibrium interest rate. shift the investment curve to the right and increase equilibrium interest rate. shift the saving curve to the right and decrease equilibrium interest rate. O shift the saving curve to the left and increase equilibrium interest rate.
In a closed economy, a temporary increase in government expenditure will shift the investment curve to the left and decrease equilibrium interest rate. shift the investment curve to the right and increase equilibrium interest rate. shift the saving curve to the right and decrease equilibrium interest rate. O shift the saving curve to the left and increase equilibrium interest rate.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:In a closed economy, a temporary increase in government expenditure will
shift the investment curve to the left and decrease equilibrium interest rate.
shift the investment curve to the right and increase equilibrium interest rate.
shift the saving curve to the right and decrease equilibrium interest rate.
shift the saving curve to the left and increase equilibrium interest rate.

Transcribed Image Text:Consider the neoclassical growth model. Suppose that in the current period, saving
per worker is higher than its steady state value. Then,
output per worker will remain unchanged in the next period.
capital per worker will be higher in the next period.
capital per worker will be lower in the next period.
capital per worker will remain unchanged in the next period.
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