Answer Happy

Why is the national saving curve upward sloping? (Select all that apply.) A. Because a rise in the real interest rate increases the opportunity cost of investment Because a rise in the real interest rate decreases the opportunity cost of investment C. Because a fall in the real interest rate decreases the opportunity cost of investment D. Because an increase in the interest rate leads households to increase their current consumption. Because an increase in the interest rate leads households to reduce their current consumption F. Because a decrease in the interest rate leads households to reduce their current consumption. G. Because a decrease in the interest rate leads households to increase their current consumption H. Because a fall in the real interest rate increases the opportunity cost of investment b. The market for financial capital is shown in the graph. Suppose the government pursued a fiscal expansion by increasing the level of government purchases. Use the line drawing tool to draw a single line to show the effect of this change in fiscal policy. Properly label your line. Carefully follow the instructions above, and only draw the required objects. What would happen to the equilibrium interest rate, the amount of investment in the economy, and the long-run growth rate in this situation? in the amount of investment in This would result in in the equilibrium interest rate, the economy, and in the long-run growth rate. c. Now suppose the fiscal contraction occurs by increasing taxes. (Hint: An increase in taxes is likely to reduce disposable income and thus reduce aggregate consumption.) Suppose a shift the NS will occur due to change in level of taxes. This would result in in the equilibrium interest rate, in the amount of investment in the economy, and growth rate. in the long-run Real Interest Rate (i) Financial Capital ($) NS' Answer options are: "an increase/a decrease" for all boxes NS ✔