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Consider the following classical economy Desired consumption: C = 300+ 0.500 Y - 200r. Desired investment: P = 200 - 300r. Government purchases: G =

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Consider the following classical economy Desired consumption: C = 300+ 0.500 Y - 200r. Desired investment: P = 200 - 300r. Government purchases: G = 100. Net exports: NX = 160 -0.100Y -0.500e. Real exchange rate: e = 20 + 600r. Full-employment output: Y = 900. a. What are the equilibrium values of the real interest rate, real exchange rate, consumption, investment, and net exports? Real interest rate = 0.2625 Real exchange rate = 17.75 Consumption = 697.5 Investment = 121.25 Net exports = 61.125

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