Which policy combination is most likely to increase investment while maintaining

Question

Which policy combination is most likely to increase investment while maintaining a relatively constant price level?
A. A decrease in gov't spending and the central bank's purchase of gov't bonds
B. A decrease in the dsicount rate and an increase in gov't spending
C. Open maret sales by the central bank of gov't bonds and a decrease in gov't spending
D. Open maret purchases of government securities and an increase in transfer payments
E. An increase in the required reserve ratio and an increase in government spending

Explanation / Answer

The answer is E

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