Desired Consumption Is C^d = 100 + 0 $\bar{\gamma}$

question 80

Essay

Desired consumption is C^d = 100 + 0.8Y - 500r - 0.5G,and desired investment is I^d = 100 - 500r.Real money demand is M^d/P = Y - 2000i.Other variables are π^e = 0.05,G = 200, $\bar{\gamma}$
= 1000,and M = 2100.
(a)Find the equilibrium values of the real interest rate,consumption,investment,and the price level.
(b)Suppose the money supply increases to 2800.Find the equilibrium values of the real interest rate,consumption,investment,and the price level.(Assume that the expected inflation rate is unchanged.)

---

Definitions:

Oats

A cereal grain known for its edible seeds, often consumed as oatmeal or rolled oats, and used as livestock feed as well as in various food products.

Wheat

A cereal grain that is a staple food worldwide, used for making products like bread, pasta, and flour.

Barley

A cereal grain that is used in various foods, beverages, and as animal feed.

Minutes

measurement unit of time equal to 1/60th of an hour or 60 seconds.