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The following equations describe the economy' in Country A in 2019. Consumption C = 1000 + 0.6Yd 400r Investment 1 = 250 50m Government spending

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The following equations describe the economy' in Country A in 2019. Consumption C = 1000 + 0.6Yd 400r Investment 1 = 250 50m Government spending G = 500 Exports X = 1500 Imports M = 500 + GAY Income tax rate t= 0.2 Money demand Md = 1000 250i Money supply M5 = 985 Expected ination rate no = 0.05 where Yd is disposable income, i is nominal interest rate, and r is the real interest rates I). What is the equilibrium real interest rate in Country A in 2019? Explain your calculations. {3 marks)

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