The assignment should be solved according to the example given.

UGBA 10 13 Summer 2020 Haas School of Business John Gonzales Assignment #3 Due June 13 at 10:00 pm PST. Submit this through the Assignments section of the bCourse site. 1. Refer back to the Complete Keynesian Model discussed in Zoom class on the past week. - In each case below [parts (a) through (d)] go back to the model discussed in class as the starting point. Solve for the complete equilibrium, verify the spending balance and show the capital market balance. (a) Solve for the new equilibrium if G is increased to 1,500. (b) Solve for the new equilibrium if interest rates are reduced to 2.00%. (c) Solve for the new equilibrium if interest rates are increased to 7.00%. (d) Solve for the new equilibrium if wealth decreases to 60,000. UGBA 101B Keynesian Equilibrium Example ohn Gonzales We have observed the values of all the exogenous variables and determined the values of all the coefficients. Now, plug into Y = C + 1 + G + X and solve. However, leave the interest rate as "i". Y = [200 + .6[Y - (50 + .1Y)] - 30i + .03(100,000)] + [300 - 25i] + 1,200 + [500 - .1Y] Do the algebra to isolate Y: Y = 9,231 - 98i We now see the interest rate impact (MP impact). AY = -98 !V AY = -98 Ai 2020-06-08 13:24: 00:25:05 / 01:11:31 (].) Speed 4\f\f01B Keynesian Equilibrium Example #2 John Gonzales Now, suppose the government undertakes expansionary fiscal policy and increases G by 100 to 1,300. Y = [200 + .6[Y -(50 + .1Y)] -30(6) + .03(100,000)] + [300 - 25(6)] + 1,300 + [500 - .1) Y = + + G + X Solve for the spending equilibrium and confirm Y = C + | + G+X. Solve for the capital market equilibrium. 2020-06-08 Spe 1:11:31\f\f