Consider an economy described by the following data (in $ trillion): Č- 3.25; I- 1.3; G= 3.5: T-3.0; NX= -1.00; i = 1; mpc= .75: a= 0.3: 6=0.1 a. Drive a simplified expressions for the consumption function, the investment function, and the net export function. a. Drive the expression for the IS curve. b. If the real interest rate is r=2, what is the equilibrium output? If r= 5, what the equilibrium output?

Consider an economy described by the following data (in $ trillion): Č- 3.25; I- 1.3; G= 3.5: T-3.0; NX= -1.00; i = 1; mpc= .75: a= 0.3: 6=0.1 a. Drive a simplified expressions for the consumption function, the investment function, and the net export function. a. Drive the expression for the IS curve. b. If the real interest rate is r=2, what is the equilibrium output? If r= 5, what the equilibrium output?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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