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Consider the following model of the goods market in a closed economy, where s measures the extent of the spread of Covid- 19 within the
Consider the following model of the goods market in a closed economy, where s measures the extent of the spread of Covid- 19 within the country. Please round to 6 decimal places in all questions.
Z = C+I+G (1) Planned aggregate expenditure C =5 + (0.8 - s) YD (2) Consumption function I=2 -s+0.2Y - 100i Planned investment G =2+s Government expenditure YD = Y - T Disposable income T = 0.2Y Tax function Y = Z Equilibrium Condition and money market: L = 5 + 0.25Y - 200i (8) Money demand M M D= (9) Money supply L = M (10) Money market equilibriumUsing the above model, solve for the equilibrium output 0*) when there is no COVIDi 9: .9 = 0, and money supply equals (g) = 5. calculate equilibrium interest rate 0*} when there is no COVID19that is s : U, and money supply equals (g) : 5. Considering the same model, calculate equilibrium output (Y*) when the economy is affected by COVID'I 9 as follows: 5 = 0.2, but money supply remains at% = 5 Considering the same model, calculate the equilibrium interest rate (i*) when the economy is affected by COVID19 as follows: s = 0.2, but money supply remains at = 5Considering the same model, calculate equilibrium output (Y*) when the economy is affected by COVID'I 9 as follows: a = 0.2, but the RBA conducted expansionary monetaiy policy and money supply is increased to g = B Considering the same model, calculate the equilibrium interest rate (i*) when the economy is affected by COVID19 as follows: s = 0.2, but the RBA conducted expansionary monetary policy and money supply is increased to M = 8Step by Step Solution
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