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QUESTION
An economy has full-employment output of 1000. Desired consumption and desired investment are C^d=200+0.8(Y-T)-500r; I^d=200-500r. Government...
An economy has full-employment output of 1000. Desired consumption and desired investment are C^d=200+0.8(Y-T)-500r;I^d=200-500r.Government purchases are 196, and taxes areT=20+0.25Y.Money demand isM^d/P=0.5Y-250(r+π^e ),Where the expected rate of inflation, π^e, is 0.10. The nominal supply of money M=9890.
