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An economy has full-employment output of 1000. Desired consumption and desired investment are C d= 200 + 0.8(Y - T) - 500r I d =
An economy has full-employment output of 1000. Desired consumption and desired investment are C d= 200 + 0.8(Y - T) - 500r I d = 200 - 500r Government purchases are 196 and taxes T = 20+ 0.25Y Money demand is: Md /P = 0.5Y -250(r+ e ), Where the expected rate of inflation e = 0.10. The nominal supply of money M = 9890. What are the general equilibrium values of the real interest rate, price level, consumption, and Investment?
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