Question: QUESTION ONE ( 4 5 MARKS ) A two - equation model below represents goods sector and monetary sector equilibrium for a bypothetical economy: (

QUESTION ONE (45 MARKS)
A two-equation model below represents goods sector and monetary sector equilibrium for a bypothetical economy:
(1): Y=L0-lonf-gf*r,L0>0,f>0,g0,e>0YrI0L0J=bY=t01-c+b1-c,r,I0>0,b0,0,
(2): Y=L0-lonf-gf*r,L0>0,f>0,g0,e>0.
As usual, Yis aggregate income, ris the interest rate, I0is the autonomous investment, and L0is the level of money supply.
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QUESTION ONE ( 4 5 MARKS ) A two - equation model

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