What are general equilibrium values of real interest rate

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Reference no: EM13186190

An economy has full-employment output of Y%u0305 = 1850. Desired consumption and desired investment are:

$C^{d}= 500 + .5(Y-T)-100r$

$I^{d}= 400 - 100r$

Government purchases and taxes are G = T = 200. Money demand is:

$M^{d}=P(.5Y-200i)$

The nominal money supply is M = 3560. The expected inflation rate is:

$\pi^{e}=.05$

What are the general equilibrium values of the real interest rate, the price level, consumption, and investment?

Reference no: EM13186190

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