Question
An economy has full-employment output of 1000. Desired consumption and desired investment are C^d=200-500r+0.8(Y-T) I^d=200+500r Government purchases are 196 and taxes are T=20+0.25Y Money demand
An economy has full-employment output of 1000. Desired consumption and desired investment are
C^d=200-500r+0.8(Y-T)
I^d=200+500r
Government purchases are 196 and taxes are
T=20+0.25Y
Money demand is
M^d/P=0.5Y-250(r+^e)
The nominal money supply, M, is 9100 and is not expected to change. What are the general equilibrium values of the real interest rate, price level, consumption, and investment?
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Macroeconomics A European Perspective
Authors: Olivier Blanchard, Alessia Amighini, Francesco Giavazzi
4th Edition
1292360895, 9781292360898
