Assume That Equilibrium GDP (Y) Is 5,000

question 19

Multiple Choice

Assume that equilibrium GDP (Y) is 5,000. Consumption (C) is given by the equation C = 500 + 0.6Y. Investment (I) is given by the equation I = 2,000 - 100r, where r is the real interest rate in percent. No government exists. In this case, the equilibrium real interest rate is:

• A) 2 percent.
• B) 5 percent.
• C) 10 percent.
• D) 20 percent.

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