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An economy has full-employment output of Y%u0305 = 1850. Desired consumption and desired investment are:
\(C^{d}= 500 + .5(Y-T)-100r\)
\(I^{d}= 400 - 100r\)
Government purchases and taxes are G = T = 200. Money demand is:
\(M^{d}=P(.5Y-200i)\)
The nominal money supply is M = 3560. The expected inflation rate is:
\(\pi^{e}=.05\)
What are the general equilibrium values of the real interest rate, the price level, consumption, and investment?
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