Use the Following to Answer Questions

question 146

Multiple Choice

Use the following to answer questions :
Exhibit: Saving, Investment, and the Interest Rate 2
-(Exhibit: Saving, Investment, and the Interest Rate 2) 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 there is a technological innovation that increases the demand for investment goods?

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

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Definitions:

Sierra Nevada Batholith

A large mass of igneous rock, primarily granite, located in the Sierra Nevada range, formed by the cooling of magma beneath the Earth's surface.

Ocean-Continent Convergence

A tectonic plate boundary situation where an oceanic plate is forced underneath a continental plate, often causing volcanic and seismic activity.

Continental Rifting

The process by which a continent stretches and splits along a rift zone, forming a new ocean basin.

Decompression Melting

A process where melting occurs due to a decrease in pressure as rock rises closer to the Earth's surface without a significant increase in temperature.