In year 2018, the government of Qatar spent is 143 billion Qatari Riyal (the national currency of Qatar). The GDP of Qatar in the same year is 1,121 billion Qatari Riyal. Qatar's desired consumption and desired investment during the year can be summarized by the following equations: cd = 1,000 – 5,000r, 1d = 800 – 3000r, where C° is the desired consumption in billions of Qatari Riyal, /° if the desired investment in billions of Qatari Riyal, and r is the real interest rate in decimal form. What is the equilibrium real interest rate, r*, in %? Round your answer to at least 2 decimal places. (E.g. 12.3456% should be entered as 12.35)
In year 2018, the government of Qatar spent is 143 billion Qatari Riyal (the national currency of Qatar). The GDP of Qatar in the same year is 1,121 billion Qatari Riyal. Qatar's desired consumption and desired investment during the year can be summarized by the following equations: cd = 1,000 – 5,000r, 1d = 800 – 3000r, where C° is the desired consumption in billions of Qatari Riyal, /° if the desired investment in billions of Qatari Riyal, and r is the real interest rate in decimal form. What is the equilibrium real interest rate, r*, in %? Round your answer to at least 2 decimal places. (E.g. 12.3456% should be entered as 12.35)
Chapter18: The Keynesian Model
Section: Chapter Questions
Problem 9SQP
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In year 2018, the government of Qatar spent is 143 billion Qatari Riyal (the national currency of Qatar). The GDP of Qatar in the same year is 1,121 billion Qatari Riyal. Qatar's desired
consumption and desired investment during the year can be summarized by the following equations:
cd
= 1,000 – 5,000r,
||
/d = 800 – 3000r,
%3D
cd
is the desired consumption in billions of Qatari Riyal, 7º if the desired investment in billions of Qatari Riyal, and r is the real interest rate in decimal form.
where
What is the equilibrium real interest rate, r*, in %? Round your answer to at least 2 decimal places. (E.g. 12.3456% should be entered as 12.35)
Expert Solution
Step 1
GDP (Gross Domestic Product) is the final value of all the goods and services produced and sold in an economy within a particular span of time. a closed economy is an economy that does not involve in trade. Thus, the formula for GDP (for a closed economy) is:
Where,
GDP is the final value of goods and services produced
C is the total consumption by the households
I is the total investment by the firms
and G is the total government spending
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