In a certain economy, the components of planned spending are given by: C = 500 + 0.8(Y - T ) - 300rIP = 200 - 400rG = 200NX = 10T = 150 Given the information about the economy above, what would be the impact on induced expenditures of a one-percentage-point increase in the real interest rate?
A. Induced expenditures would decrease by 35 units.
B. Induced expenditures would decrease by 7 units.
C. Induced expenditures would not change.
D. Induced expenditures would increase by 35 units.
Answer: C
Economics
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