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:

Federal Arbitration Act

A United States federal statute that provides for the enforcement of arbitration agreements within the context of federal and interstate matters.

Final and Definite Award

In arbitration, a conclusive decision given by an arbitrator that resolves the dispute and is binding on all parties.

Arbitrator's Bias

A situation in which an arbitrator, who is supposed to act as an impartial third-party decision-maker in a dispute resolution process, shows unfair bias towards one of the parties.

Counterclaim

A claim made by the defendant against the plaintiff that is filed along with the defendant’s answer.