In a closed economy, the full employment level of income is $90 million, C= Y and I= $ (40-3r) million, where C= consumption, Y= income, I= investment and r= the rate of interest.
If planned government expenditure is $20 million, what rate of interest would be required for there to be full employment?
10% per annum
2 )
12% per annum
3 )
14% per annum
4 )
16% per annum
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