The components of aggregate spending

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In a certain economy, the components of aggregate spending are given by: C = 100 + 0.9(Y - T) - 500r I = 150 - 1,000r G = 200 NX = 50 T = 100.

Given the information about the economy above, the immediate impact on aggregate expenditures of a one-percentage-point increase in the real interest rate (r) from 5 percent to 4 percent is ___, and the eventual impact on short-run equilibrium output is ______.

A) an increase by 150 units; a decrease by 1,500 units.

B) an increase by 15 units; a increase by 150 units.

C) a decrease by 15 units, a decrease by 150 units.

D) an increase by 150 units, an increase by 150 units

Reference no: EM131387377

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