Desired consumption is C^d = 100 + 0.8Y - 500r - 0.5G, and desired investment is I^d = 100 - 500r. Real money demand is (M^d)/P = Y - 2000i. Other variables are πe = 0.05, G = 200, = 1000, and M = 2100. Find the equilibrium values of the real interest rate, consumption, investment, and the price level.
Desired consumption is C^d = 100 + 0.8Y - 500r - 0.5G, and desired investment is I^d = 100 - 500r. Real money demand is (M^d)/P = Y - 2000i. Other variables are πe = 0.05, G = 200, = 1000, and M = 2100. Find the equilibrium values of the real interest rate, consumption, investment, and the price level.
Chapter10: Aggregate Demand And Supply
Section: Chapter Questions
Problem 5SQ
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Desired consumption is C^d = 100 + 0.8Y - 500r - 0.5G, and desired investment is I^d = 100 - 500r. Real money demand is (M^d)/P = Y - 2000i. Other variables are πe = 0.05, G = 200, = 1000, and M = 2100. Find the equilibrium values of the real interest rate, consumption, investment, and the price level.
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