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(a) Calculate the equilibrium level of national income and the equilibrium interest rate given the following information on the goods and money markets: Goods market:
(a) Calculate the equilibrium level of national income and the equilibrium interest rate given the following information on the goods and money markets: Goods market: C = 40 + 0.6Yd I = 200 - 20r G0 = 400 t= 0.2 Money market: L1 = 0.2Y L2 = 60 - 120 r M0 = 200 where Md = L1 + L2 and Ms = M0 (b) Calculate the effect on the equilibrium level of national income and the interest rate when money supply increases to $450m
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