2. Assume that equilibrium GDP (Y) is 18,000. Consumption (C) is given by the equation C = 300+0.8(Y-T). Taxes (T) are equal to 2500. Government spending is equal to 3000. Investment is given by the equation I = 5000-400r, where r is the real interest rate in percent. What is the equilibrium real interest rate? [Show your steps]

2. Assume that equilibrium GDP (Y) is 18,000. Consumption (C) is given by the equation C = 300+0.8(Y-T). Taxes (T) are equal to 2500. Government spending is equal to 3000. Investment is given by the equation I = 5000-400r, where r is the real interest rate in percent. What is the equilibrium real interest rate? [Show your steps]

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section9.A: The Simple Algebra Of Income Determination And The Multiplier

Problem 4TY

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