Find the general equilibrium value of the real interest rate

Reference no: EM13184855

Desired consumption is Cd = 100 + 0.8Y - 500r - 0.5G, and desired investment is Id = 100 -500r. Real money demand is Md/P = Y - 2000i. Other variables are e = 0.05, G = 200, = 1000, and M = 2100.

(a) Find the general equilibrium values of the real interest rate, consumption, investment, and the price level.

(b) Suppose the money supply increases to 2800. Find the general equilibrium values of the real interest rate, consumption, investment, and the price level. (Assume that the expected inflation rate is unchanged.)

Reference no: EM13184855

Questions Cloud

Explain tank was actually pressurized : If the tank was actually pressurized such that the top surface of milk was at a pressure of 123.0 kPa, what was the actual height of milk in the tank?

Compute volume of koh and kh2po4 solutions : A 100.0 mL of 10.0 mM phosphate buffer, pH 7.5 (pka2 = 7.2). You are provided with 0.200 M KOH and 0.100 M KH2PO4 solutions, Calculate volume of KOH and KH2PO4 solutions

What if incumbent managers were not generally more qualified : When China reformed state-owned enterprises, it tried a new approach to choosing managers: it put managerial jobs up for auction. The bids for the jobs consisted of promises of future profit streams that the managers would generate and then deliv..

Explain the critical temperature of the mixture : the critical temperature of the mixture is known to be 200 F. Compare your answer with the critical pressures of pure methane and pure n-hexane.

Find the general equilibrium value of the real interest rate : Find the general equilibrium values of the real interest rate, consumption, investment, and the price level.(b)Suppose the money supply increases to 2800. Find the general equilibrium values of the real interest rate, consumption, investment, and t..

State what is the percent composition of component a : the mass of component A is 2.47 g, component B is 1.12 g, and component C is 0.654 g; what is the percent composition of component A?

Explain what is the ratio of acetate to acetic acid : What is the ratio of acetate to acetic acid? What is the ratio of ethylamine to ethylammoniun ion?

Is the usps also a natural monopoly : The U.S Postal Service (USPS) is a monopoly because the federal government has blocked entry into the market for delivering first-class mail. Is the USPS also a natural monopoly How can we tell what would happen if the law preventing competition ..

Explain bond-line formulas : Using bond-line formulas, draw 6 constitutional isomers that have 1) the molecular formula C5H10O, and 2) a three membered ring

User Account

All Pages