In a closed economy, desired consumption is Cd=2000+0.9Y- 100,000r-T, and desired investment is Id = 1000-45,000r. Real money demand is Md/P-Y-6000i. Other variables are ne-0.03, G=500, Y= 1000, and M-2100. The government runs a balanced budget. The equilibrium values of the real interest rate, consumption, investment, and the price level are Or-0.04333, C=418.7, I-85.6, P = 2.3 Or-0.05, C = 400, 1-100, P-3 Or-0.02, C-400, 1-100, P=3 Or=0.01, C=420, 1 = 110, P=2

In a closed economy, desired consumption is Cd=2000+0.9Y- 100,000r-T, and desired investment is Id = 1000-45,000r. Real money demand is Md/P-Y-6000i. Other variables are ne-0.03, G=500, Y= 1000, and M-2100. The government runs a balanced budget. The equilibrium values of the real interest rate, consumption, investment, and the price level are Or-0.04333, C=418.7, I-85.6, P = 2.3 Or-0.05, C = 400, 1-100, P-3 Or-0.02, C-400, 1-100, P=3 Or=0.01, C=420, 1 = 110, P=2

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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