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Assume the following information for an imaginary, closed economy. GDP = $5 trillion consumption = $3.1 trillion government purchases = $0.7 trilliontaxes = $0.9 trillionSuppose, for this economy, the relationship between the real interest rate, r, and investment, I, is given by the equation I = 10.78 - 3.03r. (If, for example, r = 10, this means that the real interest rate is 10 percent.) The equilibrium real interest rate for this economy is a. 3.19 percent. b. 3.00 percent. c. 3.16 percent. d. 7.14 percent.
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