Question

Y= c+I+g

C= 900+0.5(y-t)

I= 750-30r

T=800

G=1200

Md=Ms

Ms= 1500

Mt=0.7y

MSP=-80r

Derive ( Md/P) the demand for real money balances equation

Answer 1

Solution

$Y = C + I + G + X - M$

$Y=900+0.5(Y-T)+750-30r+1200$

$Y=900+0.5Y-0.5T+750-30r+1200$

$0.5Y=2850-30r$

$Y=\frac{2850-30r}{0.5}$