Assume That Equilibrium GDP (Y) Is 5,000

question 86

Multiple Choice

Assume that equilibrium GDP (Y) is 5,000. Consumption (C) is given by the equation C = 500 + 0.6Y. Investment (I) is given by the equation I = 2,000 - 100r, where r is the real interest rate, in percent. In addition, assume that G=0. In this case, the equilibrium real interest rate is:

• A)2 percent.
• B)5 percent.
• C)10 percent.
• D)20 percent.

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