Assume that the four-sector model is at play. C+l+G. All expenditures are autonomous. Given: C= 700 + 80 (1- t)Y F0.25 1-210-75i G= 1000 TR=100 L-0.20Y- 40i M/P = 800 Required: 1. Compute for the simultaneous equilibrium interest rate and income for both markets, i.e. asset and goods market. 2. Graph your answer in no. 1. 3. Suppose government expenditure decreases to 880, what happens to equilibrium income and interest rates? Show your proof: computation and graph presentation

Assume that the four-sector model is at play. C+l+G. All expenditures are autonomous. Given: C= 700 + 80 (1- t)Y F0.25 1-210-75i G= 1000 TR=100 L-0.20Y- 40i M/P = 800 Required: 1. Compute for the simultaneous equilibrium interest rate and income for both markets, i.e. asset and goods market. 2. Graph your answer in no. 1. 3. Suppose government expenditure decreases to 880, what happens to equilibrium income and interest rates? Show your proof: computation and graph presentation

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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