In a market economy, the interest rate adjusts to ensure equality among
A)the investment, consumption, and net export shares of GDP and the share of GDP available for nongovernment use.
B)the investment, consumption, and net export shares of GDP and the government share of GDP.
C)the investment, consumption, and net export shares of GDP and GDP.
D)imports and exports.
E)the budget and trade deficits.

Question

Quizplus · Accepted Answer

The interest rate adjusts in a market economy to balance the investment, consumption, and net export shares of GDP. This helps ensure that there is no excess demand or supply in the economy, which would lead to inflation or a recession. The interest rate affects borrowing costs for investment and consumption, as well as the value of the currency for net exports. By adjusting the interest rate, the market can balance these different sectors of the economy and promote stable economic growth.

In a Market Economy, the Interest Rate Adjusts to Ensure