14)An economy has full-employment output of 5000. Government purchases are 1000Desired consumption and desired investment are given by C ^ d = 3000 - 2000r + 0.1Y I ^ d = 1000 - 4000r where Y is output and r is the expected real interest rate(a) Find the real interest rate that clears the goods market. Assume that output equals full- employment output. (b) Calculate the amount of saving, investment, and consumption in equilibrium. (c) If a shock to wealth causes desired consumption to decline by 200 (so that the new equation for desired consumption is C ^ d = 2800 - 2000r + 0.1Y ). find the equilibrium real interest rate, saving, investment, and consumption.
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14)An economy has full-employment output of 5000. Government purchases are 1000Desired consumption and desired investment are given by
C ^ d = 3000 - 2000r + 0.1Y
I ^ d = 1000 - 4000r
where Y is output and r is the expected real interest rate(a) Find the real interest rate that clears the goods market. Assume that output equals full- employment output.
(b) Calculate the amount of saving, investment, and consumption in equilibrium. (c) If a shock to wealth causes desired consumption to decline by 200 (so that the new equation
for desired consumption is C ^ d = 2800 - 2000r + 0.1Y ). find the equilibrium real interest rate, saving, investment, and consumption.
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