Let the consumption function be : C= 10 + 0.5(Y-T) and the investment function be : I
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Question:
Let the consumption function be
: C= 10 + 0.5(Y-T)
and the investment function be
: I = 17 - r
where r is the real interest rate, T denotes taxes and G denotes government expenditures. Let T=10 and G=5. Which of the following equations describes the equilibrium in the loanable funds market?
a. r+2Y= 54
b. 2r+Y= 54
c. 5r+Y= 54
d. 2r+3Y= 54
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