An economy is described by the following equations:
C = 2,600 + 0.8(Y - T) - 10,000r V = 2,000 - 10,000r G = 1,800 NX = 0 T = 3,000
The real interest rate, expressed as a decimal, is 0.10 (that is, 10 percent). (L02)
a. Find a numerical equation relating planned aggregate expenditure to output.
b. Using a table (or algebra), solve for short-run equilibrium output.
c. Show your result graphically using the Keynesian-cross diagram.