What determines the equilibrium interest rate in the investment model?

The equilibrium interest rate in the investment model is indeed determined by the intersection of saving and investment curves. At this intersection, the amount of funds savers are willing to lend at a given interest rate matches the amount of funds that investors are willing to borrow.

In the context of the model, the saving curve typically slopes upward, indicating that as interest rates increase, individuals and institutions are more inclined to save greater amounts. Conversely, the investment curve usually slopes downward, reflecting that lower interest rates incentivize higher levels of investment since borrowing costs are reduced. The point where these two curves meet establishes the equilibrium interest rate, as it balances the supply of savings with the demand for investment funds.

The other options, while they may influence various economic factors, do not directly determine the equilibrium interest rate in the investment model context. Taxes and government spending can affect overall savings and investment in the economy but aren't the fundamental determinants of the equilibrium interest rate within this framework. Similarly, fluctuations in disposable income might impact consumer behavior and thus the savings curve, but they don't depict the immediate mechanics of interest rate determination. Lastly, the growth rate of the economy encompasses broader trends and can indirectly affect savings and investment decisions, but it does not isolate the concept of interest rate equilibrium in