Exhibit: Saving, Investment, and the Interest Rate 1 the Economy

question 139

Multiple Choice

Exhibit: Saving, Investment, and the Interest Rate 1 The economy begins in equilibrium at point E, representing the real interest rate r₁ at which saving S₁ equals desired investment I₁. What will be the new equilibrium combination of real interest rate, saving, and investment if the government cuts taxes, holding other factors constant?

• A)point A
• B)point B
• C)point C
• D)point D

---

Definitions:

Informal Code

A set of unwritten, socially accepted rules or norms that govern individual behavior within a specific group or society.

Charter Schools

Publicly funded independent schools established by teachers, parents, or community groups under the terms of a charter with a local or national authority.

State Regulations

State Regulations refer to the rules and laws established by a state government to govern activities, businesses, and practices within its territory.