What happens to the real interest rate in the short run and in the long run? You do not need to provide precise numerical answers.

        According to the identity of national income saving is a difference between output, consumption, and government expenditures. Hence the increase in output will increase the savings assuming consumption and government expenditures constant. It is know that saving and investment are equal so investment will also increase leading the short run decrease in real interest rate. In the long run, real interest rate is back to the original level along with output.