Economists in Planet Earth, a closed economy, have collected the following information about the economy for a particular year: Potential real GDP 100) G=30 T-25 C-0.8 (Y-T)-3r O 7.50 percent O 1.25 percent O 0.50 percent O 3.00 percent 1-40-7r where r is the country's real interest rate, expressed in percent (i.e., if r-5, the real interest rate is 5%). Assume that Planet Earth is producing at potential GDP. What is the equilibrium real interest rate?

Economists in Planet Earth, a closed economy, have collected the following information about the economy for a particular year: Potential real GDP 100) G=30 T-25 C-0.8 (Y-T)-3r O 7.50 percent O 1.25 percent O 0.50 percent O 3.00 percent 1-40-7r where r is the country's real interest rate, expressed in percent (i.e., if r-5, the real interest rate is 5%). Assume that Planet Earth is producing at potential GDP. What is the equilibrium real interest rate?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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