When the investment is graphed as a function of real GDP
A) it graphs as a vertical straight line.
B) it graphs as a 45-degree line starting at the indicated level of investment.
C) it graphs as a negatively sloped line indicating the inverse relationship between interest rates and investment.
D) it graphs as a horizontal straight line at the level of investment.

Question

Quizplus · Accepted Answer

Investment is typically considered autonomous in the short run, meaning it does not change with changes in real GDP. Therefore, it is graphed as a horizontal straight line at the level of investment, indicating that it remains constant regardless of changes in real GDP.

When the Investment Is Graphed as a Function of Real