In an economy, the money-demand function is given to be: = 0.50Y- 220(r + r®). P The expected rate of inflation, x®, is 0.01, and the nominal money supply is 9,150. In this economy the full-employment level of output is 1100. Using the equilibrium condition for the asset market, determine the equation for the LM curve that gives the asset market clearing output, Y, given the price level and the real interest rate. (Enter your responses rounded to the nearest whole number.) Suppose that the general-equilibrium real interest rate is 27.45%. Given the full-employment level of output is 1100, determine the general-equilibrium price level. P = (Enter your response rounded to two decimal places.) Following an increase in government purchases, the real interest rate increases to 32.80%. Calculate the new general-equilibrium price level. %3D (Enter your response rounded to two decimal places.)

In an economy, the money-demand function is given to be: = 0.50Y- 220(r + r®). P The expected rate of inflation, x®, is 0.01, and the nominal money supply is 9,150. In this economy the full-employment level of output is 1100. Using the equilibrium condition for the asset market, determine the equation for the LM curve that gives the asset market clearing output, Y, given the price level and the real interest rate. (Enter your responses rounded to the nearest whole number.) Suppose that the general-equilibrium real interest rate is 27.45%. Given the full-employment level of output is 1100, determine the general-equilibrium price level. P = (Enter your response rounded to two decimal places.) Following an increase in government purchases, the real interest rate increases to 32.80%. Calculate the new general-equilibrium price level. %3D (Enter your response rounded to two decimal places.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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