Consider an economy with the following economic functions; cd = 1000+ 0.45Y - 45000r0.5G Id=500 22500r...
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Consider an economy with the following economic functions; cd = 1000+ 0.45Y - 45000r0.5G Id=500 22500r Md = 0.5Y - 3000 And other variables are n = 0.04, G=250, Y = 500, and M = 4200. a) Find the equilibrium values of the real interest rate, consumption, investment, and the price level. b) Suppose the money supply increases to 8400. Find the equilibrium values of the real interest rate, consumption, investment, and the price level. (Assume that the expected inflation rate is unchanged) Consider an economy with the following economic functions; cd = 1000+ 0.45Y - 45000r0.5G Id=500 22500r Md = 0.5Y - 3000 And other variables are n = 0.04, G=250, Y = 500, and M = 4200. a) Find the equilibrium values of the real interest rate, consumption, investment, and the price level. b) Suppose the money supply increases to 8400. Find the equilibrium values of the real interest rate, consumption, investment, and the price level. (Assume that the expected inflation rate is unchanged)
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To find the equilibrium values of the real interest rate consumption investment and the price level we need to solve the given economic functions simu... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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