Question: (Appendix) This question asks you to use the formulas in Appendix 9.B to find the general equilibrium values of variables for the economy described in

(Appendix) This question asks you to use the formulas in Appendix 9.B to find the general equilibrium values of variables for the economy described in Numerical Problem 4. Assume that G = 50.
a. Use the data from Numerical Problem 4 to find the numerical values of the parameters A, f1, f2, n0, nw, co > cY. cr > t0 > t, i0, ir, 0, y and, r defined in Appendix 9.B.
b. Substitute the values of these behavioral parameters into the relevant equations in Appendix 9.B to compute the general equilibrium values of the real wage, employment, output, the real interest rate, and the price level.
c. Assume that government purchases G increase to 72.5, and repeat part (b).

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The IS curve is found by setting desired saving equal to desired investment Desired saving is Sd Y Cd G Y 1275 05Y T 200r G Setting Sd Id gives Y 1275 ... View full answer

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