The following equation describe a certain economy C = 400+ 0.75T I = 200 - 100r T = 70 + 0.2Y G = 100 Money supply = 4000 Money demand...

      

The following equation describe a certain economy
C = 400+ 0.75T
I = 200 - 100r
T = 70 + 0.2Y
G = 100
Money supply = 4000
Money demand = 0.2Y – 10r
Find the values of Y, C, T, M and I

  

Answers


Dana

Using the LM equation
At equilibrium
Money demand = money supply
4000=0.2Y-10r
10r=-4000+0.2Y
r=-400+0.02Y
Using the IS equation
Y=C+I
Y=400+0.75(Y-70-0.2Y)+200-100r
r=547.5-100r
At equilibrium IS=LM
-400+0.02Y=5.475-0.01Y
Y=19308±
C=3348.7
T=3981.6
M=1308.48
I=1584

Dana05 answered the question on August 14, 2019 at 07:30


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