In a certain economy, the components of aggregate spending are given by: C = 500 + 0.75(Y - T) - 500rI = 300 - 500rG = 400NX = 30T = 40Given the information about the economy above, what would be the impact on aggregate expenditures of a one-percentage-point increase in the real interest rate (r)?
A. Aggregate expenditures would increase by 500 units.
B. Aggregate expenditures would decrease by 10 units.
C. Aggregate expenditures would decrease by 5 units.
D. Aggregate expenditures would decrease by 1,000 units.
Answer: B
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