Consider an the following equations: Y=C + I +G Y=7,000 G=4000 T=2,000 C=150+0.75(Y-T) I=1,000-50r b. Calculate the equilibrium interest rate. Using a well-labeled diagram illustrate this equilibrium
Consider an the following equations: Y=C + I +G Y=7,000 G=4000 T=2,000 C=150+0.75(Y-T) I=1,000-50r b. Calculate the equilibrium interest rate. Using a well-labeled diagram illustrate this equilibrium
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
- Consider an the following equations:
Y=C + I +G
Y=7,000
G=4000
T=2,000
C=150+0.75(Y-T)
I=1,000-50r
b. Calculate the equilibrium interest rate. Using a well-labeled diagram illustrate this equilibrium.
Expert Solution
Step 1
Equilibrium interest rate be determine by the intersection point of IS and LM curve and also algebraically by Y =C+I+G equation.
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