According to the classical model shown above, an autonomous decline in
According to the classical model shown above, an autonomous decline in investment shifts the investment schedule to the left. Furthermore, the equilibrium interest rate declines. Distance A describes an interest rate induced
a. decline in saving, which is an equal increase in consumption.
b. increase in investment.
c. decrease in investment.
d. decline in saving, which exceeds the increase in consumption.
ANSWER
A
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