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A Keynesian economy is described by the following equations.
Cd = 250 + 0.5(Y - T) - 250rId = 250 - 250rG = 300T = 300L = 0.5Y - 500r + πeM = 3000Y = 1250πe = 0
(a) Calculate the values of the real interest rate, the price level, consumption, and investment for the economy in general equilibrium.
(b) Now suppose government purchases increase to 350 with no change in taxes. What will be the real interest rate, the price level, output, consumption, and investment in the short run?
(c) What will be the real interest rate, the price level, output, consumption, and investment in the long run?
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The classical approach to macroeconomics assumes that A) wages, but not prices, adjust quickly to balance quantities supplied and demanded in markets.
Explain how would either decision change if the government imposed a 20 percent tax on earnings and interest income. Illustrate what would happen if the government exempted interest income.
Step 1: Perform research, and complete an industry analysis using each of the Five Forces in Porter's model. Support your analysis with current financial, operational, and marketing data.
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1) when inflation rises quickly, borrowers will be hurt or lenders if the actual inflation rate is less than the expected inflation then:
Lead a horse to water , but can can't make it drink. How might this adage be relevant to expansionary (as opposed to contractionary) monetary Policy?
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