-100-5r where r is the real interest rate. Assume the nominal interest rate is 8% and the inflation rate is 4 Real interest rate -0, Investment -100. Real interest rate -4, Investment -80. Real interest rate -1, Investment -95. Real interest rate -8, Investment -60.

-100-5r where r is the real interest rate. Assume the nominal interest rate is 8% and the inflation rate is 4 Real interest rate -0, Investment -100. Real interest rate -4, Investment -80. Real interest rate -1, Investment -95. Real interest rate -8, Investment -60.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: Money Growth And Intlation

Section: Chapter Questions

Problem 6PA

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Question

Assume the investment function is given by:
1-100-5r
where r is the real interest rate. Assume the nominal interest rate is 8% and the inflation rate is 4%,
Real interest rate -0, Investment -100.
Real interest rate -4, Investment -80.
Real interest rate =1, Investment -95.
Real interest rate -8, Investment 60.

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