The Total Output of the Closed Economy Moneyland Is 10,000

question 41

Essay

The total output of the closed economy Moneyland is 10,000. Consumption is explained by the function C = 3,800 + 0.7T - 150r, where r is the real interest rate. Investment (I) is given by the equation, I = 1,500 + 50r. Taxes (T) are 1,000 and government spending (G) is 3,500. What are the values of consumption, investment, and real interest rate?

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Definitions:

Differentiate

To recognize or ascertain what makes something or someone distinct or different from others.

Example

An illustration or instance that is representative of a group or set.

Identity

The categories people use to specify who they are—that is, to locate themselves relative to other people.

Embarrassment

A feeling of self-consciousness, shame, or awkwardness often caused by a perceived social misstep or mistake.