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Assume that four-sector model is at play. C+I+G. All expenditures are autonomous. Given: C = 700 + .80 (l-tJY TR = 100 t = 0.25

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Assume that four-sector model is at play. C+I+G. All expenditures are autonomous. Given: C = 700 + .80 (l-tJY TR = 100 t = 0.25 L = 0.20Y 40i | =21075i M/P =800 G = 1000 Required: 1. Compute for the simultaneous equilibrium interest rate and income for both markets, i.e. asset and goods market. 2. Graph your answer in no.1. 3. Still related to no. 1. If money supply is increased to 890, do you agree that income will decrease? Interest rate will increase? Show your proof

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