Calculate the equilibrium level of income and interest rate

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Reference no: EM13233292

(A)In the Keynesian cross, assume that the consumptionfunction is given by:
C = 100 + 0.5 (Y-T)
If planned investment = 100 Government purchases and taxes are both 50 Then calculate the equilibrium level of income.

(B) Suppose that money demand function is:
(M/P)d = 1000 - 100r

Where r is the interest rate in percentage, money supply (M)is 1000 and the price level (P) is 2. What is the equilibrium interestrate?

Reference no: EM13233292

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