Answer:
Option (B) is correct.
Explanation:
Given that,
Full-employment output = 5,000
Government purchases = 1,000
Desired consumption: Cd = 3000 - 2,000r + 0.10Y
Desired investment: Id = 1000 - 4,000r
Y = Cd + Id + Gd
Y = (3000 - 2000r + 0.10Y) + (1,000 - 4,000r) + 1,000
Y - 0.10Y = 5,000 - 6,000r
0.90Y = 5,000 - 6,000r
At full employment output level of 5,000,
0.90(5,000) = 5,000 - 6,000r
4,500 = 5,000 - 6,000r
6,000r = 500
r = 0.0833 or 8.33%
Therefore, the real interest rate that clears the goods market is equal to 8.33%.
