Consider the Long-Run Theory of Investment,saving,and Growth

question 105

Multiple Choice

Consider the long-run theory of investment,saving,and growth.In the long-run version of our macro model (with real GDP equal to Y*) ,the equilibrium interest rate is determined where

• A)aggregate demand equals aggregate expenditure.
• B)desired national saving equals desired investment.
• C)the nominal price level equals the real price level.
• D)desired consumption equals desired investment.
• E)desired saving equals desired consumption.

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Definitions:

Interest Rate

The percentage of a loan amount charged for borrowing money, expressing the cost of debt.

Present Value

Today’s value of a prospective amount of money or cash flow series, determined by a predefined rate of return.

Payment Options

Various methods available for consumers to make transactions, such as cash, credit cards, and electronic transfers.

Interest Rate

The percentage of a sum of money charged for its use, often expressed annually.