An economy has government purchases of 2000. Desired national saving and desired investment are given by Sd = 200 + 5000r + 0.10 Y - 20G
Id = 1000 - 4000r
When the full-employment level of output equals 5000, then the real interest rate that clears the goods market will be
A) 7.78%.
B) 10.00%.
C) 14.44%.
D) 23.33%.
Correct Answer:
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