An economy has government purchases of 1000. Desired national saving and desired investment are given bysd = 200 + 5000 r+0.10 Y-0.20 Gd- 1000 - 4000rWhen the full-employment level of output equals 5000, then the real interest rate that clears the goods market will be16.67%.%3D1.11%,5.56%.21.11%.

Desired national saving: Sd = 200 + 5000 r + 0.10 Y - 0.20 G Desired investment: Id = 1000 -…

Answered: An economy has government purchases of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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53) An economy has full-employment output of 5000. Government purchases are 1000. Desired consumption and desired investment are given by Cd = 3000 - 2000r+.10Y Id = 1000 - 4000r where y is output and r is the real interest rate. The real interest rate that clears the goods market is equal to A) 1.25%. B) 2.50%. C) 8.33%. D) 25.00%. Answer: C Diff: 3 Type: MC Page Ref: 119
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4. An economy has government purchases of 1000. Desired national saving and desired investment are given by gd=200+5000r+0.10Y-0.20G jd=1000-4000r When the full-employment level of output equals 5000, calculate the real interest rate that clears the goods market.
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