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2. For this question, assume that investment spending depends only on the interest rate and no longer depends on output. Assume also the interest rate

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2. For this question, assume that investment spending depends only on the interest rate and no longer depends on output. Assume also the interest rate is positive and the money supply is fixed. Given this information, a reduction in government spending (a) will cause investment to decrease. (b) will cause investment to increase. (c) may cause investment to increase or to decrease. (d) will have no effect on output. [6 points]

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