An economy has government purchases of 2000 (G=2,000). Desired national saving and desired investment are given by Sd = 200 + 5000r + (0.1Y) - (0.2G) Id = 1000 - 4000r When the full-employment level of output equals 5000, A. What is the equilibrium real interest rate? B. What is the equilibrium level of desired Investment? c. What is the equilibrium level of consumption?

MACROECONOMICS
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Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?
Section9.A: The Simple Algebra Of Income Determination And The Multiplier
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An economy has government purchases of 2000 (G=2,000). Desired national saving and desired
investment are given by
Sd = 200 + 500Or + (0.1Y) - (0.2G)
Id = 1000 - 4000r
When the full-employment level of output equals 5000,
A. What is the equilibrium real interest rate?
B. What is the equilibrium level of desired Investment?
c. What is the equilibrium level of consumption?
Transcribed Image Text:An economy has government purchases of 2000 (G=2,000). Desired national saving and desired investment are given by Sd = 200 + 500Or + (0.1Y) - (0.2G) Id = 1000 - 4000r When the full-employment level of output equals 5000, A. What is the equilibrium real interest rate? B. What is the equilibrium level of desired Investment? c. What is the equilibrium level of consumption?
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