Scenario 2 Suppose that the full employment line FE is Y=50. The desired consumption is Cd-20-40r+0.5Y, desired investment is Id=10-10r, the real money demand is Md=50-100r+Y. Suppose also that the government purchases are G=0, net exports NX-30-0.5Y-50r and nominal money supply is M=900. Refer to Scenario 2. Now suppose government purchases increase to 10. What will be the real interest rate and the price level in the short-run equilibrium? Group of answer choices r=12% and P=11.5 r=15% and P=12 r=15% and P=10 r=10% and P=10

Scenario 2 Suppose that the full employment line FE is Y=50. The desired consumption is Cd-20-40r+0.5Y, desired investment is Id=10-10r, the real money demand is Md=50-100r+Y. Suppose also that the government purchases are G=0, net exports NX-30-0.5Y-50r and nominal money supply is M=900. Refer to Scenario 2. Now suppose government purchases increase to 10. What will be the real interest rate and the price level in the short-run equilibrium? Group of answer choices r=12% and P=11.5 r=15% and P=12 r=15% and P=10 r=10% and P=10

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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