hat are the general equilibrium (that is, long-run) values of output, the real interest

rate, consumption, investment, net exports, and the price level?

Consider the following

Keynesian

economy:

Desired consumption

C

d

= 200 + 0.6(Y - T) - 200r.

Desired investment

I

d

= 300 - 300r.

Taxes

T

= 20 + 0.2Y.

Government purchases

G

= 152.

Net exports

NX

= 150 - 0.08Y - 500r.

Money demand

L

= 0.5Y - 200r.

Money supply

M

= 924.

Full-employment output

Y

= 1000