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Please answer the following question. Please show full working out/ calculations and justification, explaining the economic reasoning used to reach the answer. Suppose an economy
Please answer the following question. Please show full working out/ calculations and justification, explaining the economic reasoning used to reach the answer.
Suppose an economy is described by the IS-LM model with the following parametervalues. Autonomous consumption is 400, marginal propensity to consume is 0.65,autonomous investment is 200,the sensitivity of investment to output and interest rate are 0.1 and 90, respectively. Taxes are 100,and government spending is 130. The interest rate equals 0.05. What is the equilibrium level of investment in this economyStep by Step Solution
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