-In the above figure, a decrease in the real interest rate will result in a movement from point E to
A) point F.
B) point G.
C) point H.
D) point I.

Question

-In the above figure, a decrease in the real interest rate will result in a movement from point E to
A) point F. 
B) point G. 
C) point H. 
D) point I.

Quizplus · Accepted Answer

A decrease in the real interest rate typically leads to an increase in investment and consumption, which would shift the equilibrium point to the right along the horizontal axis (representing GDP or output) in a standard Aggregate Demand-Aggregate Supply (AD-AS) model or an Investment-Savings/Liquidity preference-Money supply (IS-LM) model. Point G represents this rightward movement, indicating higher output or income at a lower interest rate.

-In the Above Figure, a Decrease in the Real Interest