Desired consumption, desired investment, and government spending in a closed economy are Cd = 360 - 200r + 0.1Yd Id = 120 - 400r G = 120 Find an equation for desired national saving, Sd in terms of output Y and the real interest rate r. What value of the real interest rate clears the goods market when Y = 550? When Y = 600? When Y = 650? Use the goods market equilibrium condition to derive the IS curve

Q: In an economy, the desired consumption and investment functions are given by, cd = 4500+ 0.20Y-4000r…

A: Cd = 4500 + 0.2Y - 4000rId = 2400 - 5000rG= 2100

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