What interest rate level would a new equilibrium occur

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A. In the country of Suburbia equilibrium in the money market and output market exist at a per capita income of $30,000 and a market interest rate of 5%. An influx of wealth has raised average per capita income to $40,000. What, if any, economic conditions will develop if no move is made by Suburbian officials with regards to the interest rate?

B. At approximately what interest rate level would a new equilibrium occur?

C. What curve or curves would have to shift in order for this equilibrium to occur?

D. What would happen to the economy in regards to the money market and output market if the government of Suburbia lowered the interest rate to 3%?

E. What curve or curves would have to shift in order for this equilibrium to occur?

Reference no: EM131083412

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