The Investment Function Intersects the Saving Schedule at an Interest

question 124

Multiple Choice

The investment function intersects the saving schedule at an interest rate of 8 percent and a level of investment of $1.2 trillion a year. If the consumption curve intersects the 45-degree reference line at $3 trillion, then

• A)the C + I curve will intersect the 45-degree reference line at $1.2 trillion.
• B)the C + I curve will intersect the 45-degree line at $1.8 trillion.
• C)the equilibrium level of real GDP is $1.8 trillion.
• D)the equilibrium level of real GDP is $4.2 trillion.

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