n a country, the marginal propensity to consume is 0.4. Investment demand is represented by I(r ) = 100 - 10r. Suppose government expenditure and taxes decrease by 100 units. As a result, in the long run, the change in the real interest rate (Ar) is (a) 6. (b) -6. (c) 0. (d) -4.

n a country, the marginal propensity to consume is 0.4. Investment demand is represented by I(r ) = 100 - 10r. Suppose government expenditure and taxes decrease by 100 units. As a result, in the long run, the change in the real interest rate (Ar) is (a) 6. (b) -6. (c) 0. (d) -4.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

n a country, the marginal propensity to consume
is 0.4. Investment demand is represented by I(r
) = 100 - 10r. Suppose government expenditure
and taxes decrease by 100 units. As a result, in
the long run, the change in the real interest rate
(Ar) is (a) 6. (b) -6. (c) 0. (d) -4.

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