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

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Definitions:

DIBAL

Diisobutylaluminum hydride, a reducing agent commonly used in organic synthesis to reduce esters, aldehydes, and ketones to alcohols.

Acid Chlorides

Reactive derivatives of carboxylic acids where the hydroxyl group has been replaced by a chloride ion, with general formula RCOCl.

Carboxylic Acids

Organic acids characterized by the presence of at least one carboxyl group (-COOH), widely used in industry and biology.

SOCl2

Thionyl chloride, a reactive chemical compound used in the synthesis of acid chlorides from carboxylic acids.