An Economy Has Full-Employment Output of 5000

question 16

Multiple Choice

An economy has full-employment output of 5000.Government purchases are 1000.Desired consumption and desired investment are given by
= 3000 - 2000r + 0.10Y
= 1000 - 4000r
Where Y is output and r is the real interest rate.The real interest rate that clears the goods market is equal to

• A)1)25%.
• B)2)50%.
• C)8)33%.
• D)25.00%.

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