Consider a closed economy where the full-employment level of output is 1000. Its desired consumption and desired investment is cd = 300 - 2000r + 0.5(Y-T) and d = 500 - 3000r, respectively. Taxes T are 20% of output (ie, T=0.2Y). The government's G is 200 The real money demand is captured by MP = 200 + 0.2Y - 2000(r+n). The nominal money supply is 300. The expected inflation m* is 4%. Which of the following is closest to the level of price (P) in the general equilibrium? O a. 1.7 cross o Ob. 19 cross ou Oc. 2 cross ou Od. 22 cross ou

Consider a closed economy where the full-employment level of output is 1000. Its desired consumption and desired investment is cd = 300 - 2000r + 0.5(Y-T) and d = 500 - 3000r, respectively. Taxes T are 20% of output (ie, T=0.2Y). The government's G is 200 The real money demand is captured by MP = 200 + 0.2Y - 2000(r+n). The nominal money supply is 300. The expected inflation m* is 4%. Which of the following is closest to the level of price (P) in the general equilibrium? O a. 1.7 cross o Ob. 19 cross ou Oc. 2 cross ou Od. 22 cross ou

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter13: Inflation

Section: Chapter Questions

Problem 12SQ

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