3. An economy has full-employment output of 1000. The other aggregates are as follows Cd == Id = 200+0.8(YT) - 500r 200-500r G = 196 T = 20+0.25Y Money demand is Md P - = 0.5Y 250(r+²) where expected rate of inflation π² = 0.10. The nominal supply of money M = 9890. 3.1 What are the general equilibrium values of the real interest rate, price level, consumption, and and investment?. 3.2 Suppose that government purchases are increased to G = 216. What are the new gen- eral equilibrium values of the real interest rate, the price level, consumption, and and investment?.
3. An economy has full-employment output of 1000. The other aggregates are as follows Cd == Id = 200+0.8(YT) - 500r 200-500r G = 196 T = 20+0.25Y Money demand is Md P - = 0.5Y 250(r+²) where expected rate of inflation π² = 0.10. The nominal supply of money M = 9890. 3.1 What are the general equilibrium values of the real interest rate, price level, consumption, and and investment?. 3.2 Suppose that government purchases are increased to G = 216. What are the new gen- eral equilibrium values of the real interest rate, the price level, consumption, and and investment?.
Chapter22: Aggregate Demand And Aggregate Supply
Section: Chapter Questions
Problem 13P
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Question
![3. An economy has full-employment output of 1000. The other aggregates are as follows
Cd
=
Id
=
200+0.8(YT) - 500r
200-500r
G =
196
T
=
20+0.25Y
Money demand is
Md
P
=
0.5Y -250(r+π²)
where expected rate of inflation л² = 0.10. The nominal supply of money M = 9890.
3.1 What are the general equilibrium values of the real interest rate, price level, consumption,
and and investment?.
3.2 Suppose that government purchases are increased to G = 216. What are the new gen-
eral equilibrium values of the real interest rate, the price level, consumption, and and
investment?.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd73f4b81-5126-4c23-b1ba-71cdd25f4d42%2F8b877eb6-38c5-4e42-b26a-6790cb2e0982%2Fnktlpjj_processed.jpeg&w=3840&q=75)
Transcribed Image Text:3. An economy has full-employment output of 1000. The other aggregates are as follows
Cd
=
Id
=
200+0.8(YT) - 500r
200-500r
G =
196
T
=
20+0.25Y
Money demand is
Md
P
=
0.5Y -250(r+π²)
where expected rate of inflation л² = 0.10. The nominal supply of money M = 9890.
3.1 What are the general equilibrium values of the real interest rate, price level, consumption,
and and investment?.
3.2 Suppose that government purchases are increased to G = 216. What are the new gen-
eral equilibrium values of the real interest rate, the price level, consumption, and and
investment?.
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