Multiple Choice
Assume that AE = 200 + 0.5Y - 10r. Further assume that the central bank sets the interest rate as r = ro +
1) 5(? -1) , where ro is the interest rate where Y = YP. If ro is 2.0, AE function will be:
A) AE = 200 + 0.5Y - 0.5?.
B) AE = 200 + 0.5Y - 5?.
C) AE = 195 + 0.5Y + 5?.
D) AE = 195 + 0.5Y - 5?.
Correct Answer:
Verified
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