Y = E(K, L) = AK«L1-«A = 1, K = 3000, L = 9000-a = 0.6-| = |(r) = 1200 – 10rC= C (Y-T) = 0.75 (Y-T)T= 800G = 600a) Find the equilibrium real interest ratethe goods and services market.b) What is the equilibrium real interest rate in the loanable funds market? (Hint: Thinkabout how the goods and services market equilibrium condition relates to theloanable funds market equilibrium condition)

a. Y=AKαL1-αY=1 x 30000.6 x…

Y = F(K, L) = AKªL^-« %3D A = 1, K = 3000, L = 9000 a = 0.6 |= |(r) = 1200 – 10r %3D C = C (Y-T) = 0.75 (Y-T) T= 800 G = 600 a) Find the equilibrium real interest rate in the goods and services market.

Y = F(K, L) = AKªL^-« %3D A = 1, K = 3000, L = 9000 a = 0.6 |= |(r) = 1200 – 10r %3D C = C (Y-T) = 0.75 (Y-T) T= 800 G = 600 a) Find the equilibrium real interest rate in the goods and services market.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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