SA=−20 + 0.4Y

Multiple Choice

SA=−20 + 0.4Y
Ig = 25 − 3i
(Advanced analysis) The equations refer to a private closed economy, where S is saving, Ig is gross
Investment, i is the real interest rate, and Y is GDP. If the real interest rate is 5 (percent) , investment will
Be

A) $10 and the equilibrium GDP will be $75.
B) $15 and the equilibrium GDP will be $100.
C) $10 and the equilibrium GDP will be $120.
D) $15 and the equilibrium GDP will be $180.