The Following Information Is for a Private Closed Economy,where I_g

question 148

Multiple Choice

The following information is for a private closed economy,where I_g is gross investment,S is saving,and Y is gross domestic product (GDP) .
I_g = 80
S = -80 + .4Y
-Refer to the above information.In equilibrium,consumption will be:

• A) $400
• B) $280
• C) $320
• D) $360

---

Definitions:

Annual Interest Rate

The percentage of principal that is paid as interest to the lender annually, not accounting for the compound interest within that year.

Maturity Value

The final amount payable at the end of a financial instrument's term, including the principal and accumulated interest.

Commercial Paper

Promissory notes issued by large corporations to borrow funds for a short term.

Discount Rate

The interest rate charged to commercial banks and other financial institutions for the loans they take from a country's central bank or Federal Reserve.