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e. What are the effects of the shock on the short-run equilibrium values of output Y, consumption C, investment I , real interest rate 'r
e. What are the effects of the shock on the short-run equilibrium values of output Y, consumption C, investment I , real interest rate 'r and price P? Fill in the following table that denotes the change in each of the variables. There are 6 blanks to ll. You can use exact fractions, or if using a calculator round up to 1 decimal place. (For interest rates, you need to write, for example, 1.1%, and not just 1%.) AY AC AI Ar(%) Ai(%) AP change: C = 100 + 0.5 . (Y -T) I = 340 - 1000 - r where Y is real output and r is the real interest rate. Government purchases and taxes are G = 150, T = 100. The LM curve (money market equilibrium) curve is M Y P = 22 where P is the price level and i is the nominal interest rate. The Central Bank (CB) is initially supplying M = 5000 units of money, and expected inflation is re = 0.03. Assume that the long-run equilibrium level of output is Y = 1000. Short-run equilibrium output is initially at the same level (Y = 1000). Suddenly, news of a new oral Covid medicine raises expected inflation to * = 0.08
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