positive spending shocks lead to ________ real interest rates ________.
A)higher;in both the short and long runs
B)higher;in the short run but not in the long run
C)lower;in both the short and long runs
D)lower;in the short run but not in the long run

Question

Quizplus · Accepted Answer

Positive spending shocks lead to higher real interest rates in both the short and long runs because they increase the demand for loanable funds, which drives up the price of borrowing.

Positive Spending Shocks Lead to ________ Real Interest Rates ________

Positive Spending Shocks Lead to Real Interest Rates