Consider an economy described by the following: C = $4 trillion I = $1.5 trillion G =
Question:
Consider an economy described by the following:
C̅ | = $4 trillion |
I̅ | = $1.5 trillion |
G̅ | = $3.0 trillion |
T̅ | = $3.0 trillion |
N̅X̅ | = $1.0 trillion |
f̅ | = 0 |
mpc | = 0.8 |
d | = 0.35 |
x | = 0.15 |
λ | = 0.5 |
r̅ | = 2 |
a. Derive expressions for the MP curve and the AD curve.
b. Calculate the real interest rate and aggregate output when π=2 and π = 4.
c. Draw a graph of the MP curve and the AD curve, labeling the points given in part (b).
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a The MP curve is given as r 2 05 The ...View the full answer
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Related Book For 
Economics of Money Banking and Financial Markets
ISBN: 978-0134733821
12th edition
Authors: Frederic S. Mishkin
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