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Question
The investment function intersects the saving schedule at an interest rate of 8 percent and a level of investment of $1.2 trillion a year. If the consumption curve intersects the 45 -degree reference line at $3 trillion, then
A) the C + I curve will intersect the 45-degree reference line at $1.2 trillion.
B) the C + I curve will intersect the 45-degree line at $1.8 trillion.
C) the equilibrium level of real GDP is $1.8 trillion.
D) the equilibrium level of real GDP is $4.2 trillion.
Answer
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