A Keynesian Economy Is Described by the Following Equations

question 51

Essay

A Keynesian economy is described by the following equations:
Cᵈ = 250 + 0.5(Y - T)- 250r
Iᵈ = 250 - 250r
G = 300
T = 300
L = 0.5Y - 500r + πᵉ
ᴹ = 3000
Y = 1250
πᵉ = 0
a.Calculate the values of the real interest rate,the price level,consumption,and investment for the economy in general equilibrium.
b.Now suppose government purchases increase to 350 with no change in taxes.What will be the real interest rate,the price level,output,consumption,and investment in the short run?
c.What will be the real interest rate,the price level,output,consumption,and investment in the long run?

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Definitions:

Smell

The sense that enables the detection of chemical molecules in the air, leading to the perception of odors.

Kinesthesia

The sense that detects bodily position, weight, or movement of the muscles, tendons, and joints, enabling bodily movements coordination.

Sense Of Taste

The sensory experience associated with the flavors of substances, including the five basic tastes: sweet, sour, salty, bitter, and umami.

Sensations

The initial information gathering and processing of the sensory system from the external environment.