Business, 16.06.2020 16:57, ayoismeisjjjjuan
An economy has full-employment output of 6,000. Government purchases, G, are 1 comma 000. Desired consumption and desired investment are
Cd = 3,800 - 2,000r + 0.20Y, and
Id = 1,200 - 3,000r,
where Y is output and r is the real interest rate.
A. Find an equation relating desired national saving, Sd, to r and Y.
Sd = + r + Y
B. Using the goods market equilibrium condition find the real interest rate that clears the goods market. Assume that output equals full-employment output.
r = % (enter your response in percent rounded to one decimal place).
C. Government purchases rise to 1,800. What is the new equilibrium real interest rate?
r' = % (enter your response in percent rounded to one decimal place).
Answers: 3
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An economy has full-employment output of 6,000. Government purchases, G, are 1 comma 000. Desired co...
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