Here's another set of equations describing an economy:
C = 14,400 + 0.5(Y - T) - 40,000r
Ip = 8,000 - 20,000r
G = 7,800
NX = 1,800
T = 8,000
Y* = 40,000
Questions:
a. Find a numerical equaltion relating planned aggregate expenditure to output and to the real interest rate.
b. At what value should the Fed set the real interest rate to eliminate any output gap?