1. The total government expenditure multiplier is less than one because

(a) government expenses affect labor demand.

(b) labor supply reacts to interest rate changes and consumption demand is affected by taxes.

(c) investment demand falls dramatically when the government goes into debt.

(d) the marginal propensity to consume is less than one.

2. If the interest rate goes up, what happens to the investment demand curve?

(a) It shifts to the right.

(b) It shift to the left.

(c) It stays put.

(d) We cannot tell.