An economy has government purchases of 1000. Desired national saving and desired investment are given by Sd = 200 + 5000r + 0.10Y - 0.20G Id = 1000 - 4000rWhen the full-employment level of output equals 5000, then the real interest rate that clears the goods market will be
A. 16.67%.
B. 21.11%.
C. 1.11%.
D. 5.56%.
Answer: D
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a. True b. False
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a. 1.9 percent b. 10 percent c. 2 percent d. 5 percent
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