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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 country:
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:
Z = C + I + G (1) Planned aggregate expenditure C = 5 + (0.75 .9) YD (2) Consumption function I = 2.5 23 + 0.25Y 1002' (3) Planned investment G = 2.5 -| s (4) Government expenditure Y9 = Y T (5) Disposable income T = 1 + 0.25Y (6) Tax function Y : Z (7) Equilibrium Condition and money market: L = 5 + s + 0.125Y 2002' (8) Money demand = % (9) Money supply M P (10) Money market equilibrium Using the above model, solve for the equilibrium output (1*) when there is no COVID'I 9: s : 0, and money supply equals (g) : 5. Consideringthe model, calculate equilibrium interest rate (Pt) when there is no COVID19that is S = 0, and money supply equals I % l = 5. Notice: For interest rates, report the result as it is in number, do not convert it to %. For example, if i*=0.02, report it as 0.02, not 2%. Give your answers in 5 decimal places. Considering the model, calculate equilibrium output (Y*) when the economy is affected by COVID19 as follows:8 = 0-25, but money supply \"311131115 at l % l = 5- Considering the model, calculate equilibrium interest rate (i*) when the economy is affected by COVID19 as follows: 3 = 0.25, but money supply remains at i %l : 5. Notice: For interest rates, report the result as it is in number, do not convert it to %. For example, if i*=0.02, report it as 0.02, not 2%. Give your answers in 5 decimal places. Considering the model, calculate equilibrium interest rate (i*) when the economy is affected by COVID19 as follows: covid-IQ with 3 = 0.25, but money supply of @ = 8.33333. Notice: For interest rates, report the result as it is in number, do not convert it to %. For example, if i*=0.02, report it as 0.02, not 2%. Give your answers in 5 decimal placesStep by Step Solution
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