Consider the following short-run IS-LM model described by equations (1) through (6): (1) C= 200+ 0.8(Y - T); (2) T = 800; (3) G = 500; (4) 1 = 700 - 25 r; (5) Y=C+I+G; (6) M/P = 0.6Y - 60r where the nominal money supply is M-1800 and the price level is P = 3. Then, in the short run, the equilibrium interest rate for the economy is given by: Or* = 12.44 percent Or* = 9.56 percent Or* = 10.42 percent Or* = 8.28 percent

Consider the following short-run IS-LM model described by equations (1) through (6): (1) C= 200+ 0.8(Y - T); (2) T = 800; (3) G = 500; (4) 1 = 700 - 25 r; (5) Y=C+I+G; (6) M/P = 0.6Y - 60r where the nominal money supply is M-1800 and the price level is P = 3. Then, in the short run, the equilibrium interest rate for the economy is given by: Or* = 12.44 percent Or* = 9.56 percent Or* = 10.42 percent Or* = 8.28 percent

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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