The following equations describe an economy. Y = C + I + G. C = 120 + 0.5( Y - T ). I = 100 - 10r. G = 50. T = 40. ( M/ P) d = Y - 20r. M = 600. P = 2. What are the equilibrium level of income and the equilibrium interest rate? If the government increases government spending by 45, what will be the new equilibrium level of income and equilibrium interest rate?
The following equations describe an economy. Y = C + I + G. C = 120 + 0.5( Y - T ). I = 100 - 10r. G = 50. T = 40. ( M/ P) d = Y - 20r. M = 600. P = 2. What are the equilibrium level of income and the equilibrium interest rate? If the government increases government spending by 45, what will be the new equilibrium level of income and equilibrium interest rate?
Chapter11: Managing Aggregate Demand: Fiscal Policy
Section11.B: Algebraic Treatment Of Taxes And Fiscal Policy
Problem 1TY
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The following equations describe an economy.
Y = C + I + G.
C = 120 + 0.5( Y - T ).
I = 100 - 10r.
G = 50.
T = 40.
( M/ P) d = Y - 20r.
M = 600.
P = 2.
- What are the equilibrium level of income and the equilibrium interest rate?
- If the government increases government spending by 45, what will be the new equilibrium level of income and equilibrium interest rate?
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