The Following Equations Describe a Keynesian Model of the Economy

question 66

Essay

The following equations describe a Keynesian model of the economy.
C^d= 500 + 0.5(Y - T)- 100r
I^d = 350 - 100r
L = 0.5Y - 200i
π^e = 0.05,G = T = 200, = 1850
M = 3560
(a)Find the full-employment equilibrium values of the real interest rate,consumption,investment,and the price level.
(b)Suppose government purchases decline to 175,with no change in taxes.What happens to the real interest rate,output,consumption,and investment in the short run (in which the price level is fixed)? What happens in the long run to the real interest rate,consumption,investment,and the price level?
(c)Suppose instead that government purchases rise to 225,with no change in taxes,starting from the equilibrium in part (a).What happens to the real interest rate,output,consumption,and investment in the short run (in which the price level is fixed)? What happens in the long run to the real interest rate,consumption,investment,and the price level?

Identify the principles and strategies of inventory management and control systems.

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Definitions:

Statement of Stockholders' Equity

A financial document that shows changes in the value of a company's equity over a specific period, including investments by shareholders and retained earnings.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, leading to the net income or loss.

Statement of Cash Flows

A financial statement that shows the cash inflows and outflows for a business over a specified period.