Question:
Given the following information related to product and money markets,
\(\text{Product Market}\\C = 300 +0.8(Y – T)\\T = 200 +0.2(Y)\\I_0 = 300; G_o = 400\) \(\text{Money Market}\\\frac{M_0}P=0.4Y-200i\\M_0=900; P = 1 (Fixed)\)
where Y Income, C = Consumption, T = Tax, I0 = Autonomous Investment, G0 = Autonomous Government Expenditure, M0 = Nominal Money Demand, P = Price, and i = Interest Rate.
The equilibrium level of interest rate (in %) is ______ (round off to 2 decimal places)
Given the following information related to product and money markets,
\(\text{Product Market}\\C = 300 +0.8(Y – T)\\T = 200 +0.2(Y)\\I_0 = 300; G_o = 400\) \(\text{Money Market}\\\frac{M_0}P=0.4Y-200i\\M_0=900; P = 1 (Fixed)\)
where Y Income, C = Consumption, T = Tax, I0 = Autonomous Investment, G0 = Autonomous Government Expenditure, M0 = Nominal Money Demand, P = Price, and i = Interest Rate.
The equilibrium level of interest rate (in %) is ______ (round off to 2 decimal places)
\(\text{Product Market}\\C = 300 +0.8(Y – T)\\T = 200 +0.2(Y)\\I_0 = 300; G_o = 400\) \(\text{Money Market}\\\frac{M_0}P=0.4Y-200i\\M_0=900; P = 1 (Fixed)\)
where Y Income, C = Consumption, T = Tax, I0 = Autonomous Investment, G0 = Autonomous Government Expenditure, M0 = Nominal Money Demand, P = Price, and i = Interest Rate.
The equilibrium level of interest rate (in %) is ______ (round off to 2 decimal places)
Updated On: Oct 1, 2024
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Correct Answer: 16.65
Solution and Explanation
The correct answer is: 16.65 or 16.69 (approx.)
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