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

question 112

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 spending, holding other factors constant?

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

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Definitions:

Lemurs

A group of primates known for their large eyes and tail, native exclusively to the island of Madagascar and surrounding areas. They are noted for their diverse species and ecological roles in their habitats.

Bonobos

A species of great ape known for its peaceful behavior, found in the Congo basin, which is genetically close to humans.

Primate Growth

The physical and biological development process of primates, including humans, apes, and monkeys, from infancy through adulthood.

Adolescence

The transitional stage of physical and psychological development that generally occurs during the period from puberty to legal adulthood.