The market-clearing interest rate is found:
A) At the intersection of the saving and investment function.
B) At the intersection of supply and demand.
C) At the point where borrowing and saving take place.
D) At the point where the transformation curve has a slope equal to R.
E) None of the above.

Question

Quizplus · Accepted Answer

The market-clearing interest rate is determined where the saving and investment functions intersect, as this is where the amount saved equals the amount invested.

The Market-Clearing Interest Rate Is Found