Scenario 26-2

Multiple Choice

Scenario 26-2.Assume the following information for an imaginary,closed economy.
GDP = $5 trillion;consumption = $3.1 trillion;
government purchases = $0.7 trillion;and taxes = $0.9 trillion.
-Refer to Scenario 26-2.Suppose,for this economy,the relationship between the real interest rate,r,and investment,I,is given by the equation I = 10.78 - 3.03r.(If,for example,r = 10,this means that the real interest rate is 10 percent. ) The equilibrium real interest rate for this economy is

A) 3.19 percent.
B) 3.00 percent.
C) 3.16 percent.
D) 7.14 percent.