Consider the simplest macroeconomic model,with a closed economy and no government.If we assume that desired investment is autonomous with respect to national income,then the investment function (which graphs desired investment against actual national income)will be
A)negatively sloped.
B)positively sloped and relatively steep.
C)positively sloped and relatively flat.
D)vertical.
E)horizontal.

Question

Quizplus · Accepted Answer

In a closed economy with no government, if desired investment is autonomous with respect to national income, it means that investment does not change with changes in national income. Therefore, the investment function is horizontal, indicating that investment remains constant regardless of the level of national income.

Consider the Simplest Macroeconomic Model,with a Closed Economy and No