Question: . Consider the goods market model where consumption is given by: C = C0 + 610/ T), investment is given by: I 2 be +

. Consider the goods market model where consumption is given by: C = C0 + 610/ T), investment is given by: I 2 be + b1Y bzi, and G and T are given. Assuming C0 = 100, C1 = 0.5, b0 2 150, bl = 0.3, and b2 2 1,000. Keeping all other things constant, what will be the change in the equilibrium investment (1*) in the goods market if the interest rate, i, is reduced by 1% or 0.01? a $10 b. $50 c. $25 d. $20 e. All of the answers here are incorrect
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