Consider a small macroeconomy located near the South Pacific Ocean where the current interest rate is 15 percent and the potential level of real GDP equal to $2.7 billion. Consumers spending behavior is described by the equation: C = 175 + 0.8DI, while firm's investment spending behavior is described by the equation: I = 60 + 0.25Y-750r. Trade is allowed and currently, total exports is fixed at $150 million while total imports is described by the equation: IM = 320 +0.1Y. The government's spending is fixed at $840 million and net taxes is described by the equation: T=50 + 0.25Y. (Question 1 of 6) What is the current equilibrium level of GDP (in millions of dollars)? (report your answer at 3 decimal places)
Consider a small macroeconomy located near the South Pacific Ocean where the current interest rate is 15 percent and the potential level of real GDP equal to $2.7 billion. Consumers spending behavior is described by the equation: C = 175 + 0.8DI, while firm's investment spending behavior is described by the equation: I = 60 + 0.25Y-750r. Trade is allowed and currently, total exports is fixed at $150 million while total imports is described by the equation: IM = 320 +0.1Y. The government's spending is fixed at $840 million and net taxes is described by the equation: T=50 + 0.25Y. (Question 1 of 6) What is the current equilibrium level of GDP (in millions of dollars)? (report your answer at 3 decimal places)
Chapter17: Capital And Time
Section: Chapter Questions
Problem 17.2P
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Transcribed Image Text:Consider a small macroeconomy located near the South Pacific Ocean where the current interest rate is 15 percent and the potential level of real
GDP equal to $2.7 billion. Consumers spending behavior is described by the equation: C = 175 + 0.8DI, while firm's investment spending
behavior is described by the equation: I = 60 + 0.25Y-750r. Trade is allowed and currently, total exports is fixed at $150 million while total
imports is described by the equation: IM = 320 +0.1Y. The government's spending is fixed at $840 million and net taxes is described by the
equation: T=50 + 0.25Y.
(Question 1 of 6)
What is the current equilibrium level of GDP (in millions of dollars)? (report your answer at 3 decimal places)
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