| Question | Consider an economy in which government purchases, taxes, and net exports are all zero, the Consumption function is C = 300 + 0.75Y And investment spending (I) depend on the rate of interest (r) in the following way: I = 1,000 – 100r Find the equilibrium GDP if the Fed makes the rate of interest (a) 2 percent (r = 0.02), (b) 5 percent, and (c) 10 percent. |
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| Subject | business-economics |
