Question
Consider the following economy: Department of Economics Queen's University Econ320: Macroeconomic Theory II Instructor: Afifa Khazri Tutorial 5 Desired consumption:Cd= 1275 + 0.5(YT)200r Desired investment:Id=
Consider the following economy:
Department of Economics Queen's University
Econ320: Macroeconomic Theory II
Instructor: Afifa Khazri
Tutorial 5
Desired consumption:Cd= 1275 + 0.5(YT)200r
Desired investment:Id= 900200r
Real money demand:L= 0.5200i
Full-employment output:Y= 4600
Expected inflation:e= 0
(a) Suppose thatT=G= 450 and thatM= 9000. Find an equation describing theIScurve. Finally, find an equation for the aggregate demand curve.
(b) What are the equilibrium values of output, consumption, investment, the real interest rate, and the price level.
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3rd Edition
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