Determine and represent the equilibrium simulated on goods

Reference no: EM133536309

Problem

Consider an open economy at full employment with the factors described by the following relationships:

C=0.9Yd+100
I=600-2000i
G=600
T=1000
X=200
MS=0.1Y
Mo=550
Lm=0.25Y-1500i
with Y: the level of production,
C is consumption,
Yd disposable income,
i the interest rate,
T taxes,
I investment
G public spending,
X exports,
M imports,
Lm, the demand for money
MS money supply.
Prices and wages are rigid.

Question A. Determine and represent the equilibrium simulated on the goods and services market and the financial market?

Question B. Determine the level of investment in this economy, and specify how it is financed?

Reference no: EM133536309

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