a. Suppose the central bank’s policy is to adjust the money supply to maintain the interest rate at 3 percent, so r = 3. Solve for GDP (Y). Y=______ b. How much is the private saving (SPVT)? SPVT=______ c. How much is the government spending multiplier (k)? k=______
Consider a closed economy in which:
C=250+0.8 (Y-T)
I=400−30 r
T=150
G=220
Y=C+I+G
where Y is
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a. Suppose the central bank’s policy is to adjust the money supply to maintain the interest rate at 3 percent, so r = 3. Solve for GDP (Y). |
Y=______ |
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b. How much is the private saving (SPVT)? |
SPVT=______ |
|
c. How much is the government spending multiplier (k)? |
k=______ |
|
d. Assuming no change in |
ΔG=______ |
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e. Assuming no change in fiscal policy, what change in the interest rate (Δr) would restore full employment? |
Δr=______ |
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