An economy has full-employment output of 5000.Government purchases are 1000.Desired consumption and desired investment are given by Cd = 3000 - 2000r + 0.10Y
Id = 1000 - 4000r
Where Y is output and r is the real interest rate.The real interest rate that clears the goods market is equal to
A) 1) 25%.
B) 2) 50%.
C) 8) 33%.
D) 25.00%.
Correct Answer:
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