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2. Question 2 assumes the same values as question 1 except now planned investment depends upon the interest rate. C = 200 + .6(Y-T) T

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2. Question 2 assumes the same values as question 1 except now planned investment depends upon the interest rate. C = 200 + .6(Y-T) T = 200 G = 200 Assume that planned investment (IPlanned) varies with the interest rate (r) as follows: TPlanned 15 40 10 120 5 200 a. Calculate equilibrium GDP for interest rates of 15, 10 and 5 percent. (Hint: use the formula for equilibrium GDP to calculate GDP)

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