=+autonomous consumption. Suppose also that investment is a linear function of the interest rate: I(r) = c

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=+autonomous consumption. Suppose also that investment is a linear function of the interest rate:

I(r) = c – dr, where c > 0 and d > 0. The parameter d measures the sensitivity of investment to the interest rate, and the parameter c is a constant sometimes called autonomous investment.

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Macroeconomics

ISBN: 9781429240024

8th Edition

Authors: N Gregory Mankiw

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