- Problem 5. The economy is described by the consumption function C = 40+ş. Yn where Yp is disposable income, investment

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Problem 5 The Economy Is Described By The Consumption Function C 40 S Yn Where Yp Is Disposable Income Investment 1 (72.48 KiB) Viewed 32 times

- Problem 5. The economy is described by the consumption function C = 40+ş. Yn where Yp is disposable income, investment I = 170 – 1600r where r is the real interest rate. It is known that the government budget is always balanced, and that the government constantly adjusts fiscal policy, so that government spending is 25% of GDP. The interest rate rule is r = 0.05 +2(1 – 0.04) +0.15(Y-150). Inflation is 4%. r = Find the equilibrium GDP in the IS/MP model. 2