Business, 13.07.2021 16:00 anahitrejo1
Consider IS-LM model. Let the money demand function be left parenthesis M over P right parenthesis to the power of d equals 60 minus 20 r plus 4 Y, the consumption function be C equals 12 plus 0.8 left parenthesis Y minus T right parenthesis and the investment function be I equals 30 minus 2 rI where r is the real interest rate in %. Let T denote taxes, G denote government purchases, P denote the price level and M to the power of S denote the money supply. Calculate the following (Round up to TWO decimal places if needed. Enter only numbers) (1) Assume that T = 20, G = 10, P = 3 and M to the power of S= 300.
a. Calculate the equilibrium real interest rate r.
b. Calculate income Y
c. Calculate consumption C
d. Calculate investment I
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Consider IS-LM model. Let the money demand function be left parenthesis M over P right parenthesis t...
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