Consider the simplest macroeconomic model, with a closed economy and no government. If we assume that desired investment is autonomous with respect to national income, then the investment function (which graphs desired investment against actual national income)will be
A)negatively sloped.
B)vertical.
C)positively sloped and relatively steep.
D)horizontal.
E)positively sloped and relatively flat.

Question

Quizplus · Accepted Answer

If desired investment is autonomous, then it is not influenced by changes in national income. This means that the investment function will be a horizontal line, since the level of desired investment will be the same regardless of the level of national income.

Consider the Simplest Macroeconomic Model, with a Closed Economy and No