Answer to Question #221115 in Macroeconomics for Spiritual

Question

Given that in an economy, , I, MS =300, Mt = 0.4Y, and Mz=125-200r where, Y= income, C= consumption, I= investment, MS= money supply, Mt= transactional-precautionary money demand, Mz= speculative money demand and r= interest rate. Calculate;

The equilibrium level of income and interest rate in this economy.

The level of C, I, Mt, and Mz when the economy is in equilibrium

Now, assuming the economy is open with government (G) participation and  external trade which is summarized as follows; export(X)= 100-0.10Y, import(M)=50, G=100, Taxes(T)= 100 and C, I, MS, Mt, and Mz the same as defined in (a) above. Calculate;

The equilibrium income and interest rate in this new economy.

The level of C, I, Mt, and Mz when the economy is in equilibrium

Answer 1

The question is missing some information i.e. the value of I is not given. Kindly check on it.