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The diagram below show the market for financial capital assuming that national income is constant at potential GOP, Y*. NSo NS1 Real Interest Rate I*

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The diagram below show the market for financial capital assuming that national income is constant at potential GOP, Y*. NSo NS1 Real Interest Rate I* 11 12 13 Quantity of Investment and Saving ($) FIGURE 25-2 Refer to Figure 25-2. Suppose national saving is reflected by NSo and investment demand is reflected by lo". If the real interest rate is 11, there is which will drive the interest rate down until it reaches i* Select one: a. an excess supply of financial capital O b. an excess demand for investment O c. an excess supply of public saving O d. an excess demand for financial capital

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