Multiple Choice
An economy has full-employment output of 5000.Government purchases are 1000.Desired consumption and desired investment are given by
Cᵈ = 3000 - 2000r + .10Y
Iᵈ = 1000 - 4000r
Where Y is output and r is the real interest rate.The real interest rate that clears the goods market is equal to
A) 1.25%.
B) 2.50%.
C) 8.33%.
D) 25.00%.
Correct Answer:
Verified
Correct Answer:
Verified
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