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Faradia is a closed economy who's national saving (NS) and investment (1) are given by the following equations: NS = 10 + 0.5 x r
Faradia is a closed economy who's national saving (NS) and investment (1) are given by the following equations: NS = 10 + 0.5 x r I =20 - 1.5 xr where r is the real interest rate. Suppose the government of Faradia increases the budget surplus by 5. Which of the following effects will occur? Select one: a. Decrease in national saving, rise in investment. b. Increase in national saving, fall in investment. c. Increase in investment, fall in the real interest rate. d. Increase in investment, rise in the real interest rate. e. Decrease in national saving, rise in real interest rate
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