Question
Consider an economy described as follows: Y=C+I+G C=100 + 0.75(Y-T) I= 500-50r G=125 T=100 Where Y is GDP, C is consumption, I is investment, G
Consider an economy described as follows:
Y=C+I+G
C=100 + 0.75(Y-T)
I= 500-50r
G=125
T=100
Where Y is GDP, C is consumption, I is investment, G is government expenditure, T is taxes and r is the interest rate. If Y is 2000, what would be the interest rate? Suppose the monetary authorities want to set interest rate at 4%. What would happen to Y?
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Managerial Economics Applications, Strategies and Tactics
Authors: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
13th edition
1285420926, 978-1285962399, 978-1285947853, 1285947851, 978-1285420929
