Given that in an economy, Given that in an economy, C = 102+0.7Y, I=150-100r, MS =300, Mt = 0.4Y, and Mz=125-200r where, Y= income, C= consumption, I= investment, MS= money supply, Mt= transactional-precautionary money demand, Mz= speculative money demand and r= interest rate. Calculate; 1. The equilibrium level of income and interest rate in this economy. 2. The level of C, I, Mt, and Mz when the economy is in equilibrium.
Given that in an economy, Given that in an economy, C = 102+0.7Y, I=150-100r, MS =300, Mt = 0.4Y, and Mz=125-200r where, Y= income, C= consumption, I= investment, MS= money supply, Mt= transactional-precautionary money demand, Mz= speculative money demand and r= interest rate. Calculate; 1. The equilibrium level of income and interest rate in this economy. 2. The level of C, I, Mt, and Mz when the economy is in equilibrium.
Chapter26: Monetary Policy
Section: Chapter Questions
Problem 4SQP
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Given that in an economy, Given that in an economy, C = 102+0.7Y, I=150-100r, MS =300, Mt = 0.4Y, and Mz=125-200r where, Y= income, C= consumption, I= investment, MS= money supply, Mt= transactional-precautionary money
1. The equilibrium level of income and interest rate in this economy.
2. The level of C, I, Mt, and Mz when the economy is in equilibrium.
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