Use the Following to Answer Questions

question 156

Multiple Choice

Use the following to answer questions :
Exhibit: Saving, Investment, and the Interest Rate 1
-(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 raises taxes, holding other factors constant?

• A) Point A
• B) Point B
• C) Point C
• D) Point D

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