Use the Following to Answer Questions

question 38

Multiple Choice

Use the following to answer questions :
Exhibit: Keynesian Cross and Loanable Funds

-(Exhibit: Keynesian Cross and Loanable Funds) Both graphs illustrate the inverse relationship between the equilibrium interest rate and the equilibrium level of income.Planned expenditures increase in the Keynesian-cross model as a result of ______,and saving increases in the loanable funds model as a result of ______.

• A) an increase in taxes; an increase in real money balances
• B) a decrease in the interest rate; an increase in income
• C) a decrease in velocity; an increase in government spending
• D) an increase in the interest rate; a decrease in income

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