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Desired consumption and investment are

Cd= 4000-4000r+0.2Y
Id= 2400-4000r

As usual, Y is output and r is the real interest rate. Government purchases are 2000.

(a) Find the equilibrium value of the real interest rate if Y =10000.
(b) Find the equilibrium value of the real interest rate if Y = 10200.
(c) Graph the IS curve for this economy

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M942489

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