In Macroland the price level is constant and components of aggregate expenditure are given by:
C = 100 + 0.9(Y - T)
I = 150 - 1000r
G=200
NX=50
a) If net taxes equal 100 and financial market conditions set the interest rate to equal 0.04 (4 percent), what is equilibrium real GDP?
b) If an increase in the money supply lowered the market interest to 0.03 (3 percent) what effect would this have on equilibrium real output.

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The Answer of In Macroland the price level is constant and components of aggregate expenditure are given by:
C = 100 + 0.9(Y - T)
I = 150 - 1000r
G=200
NX=50
a) If net taxes equal 100 and financial market conditions set the interest rate to equal 0.04 (4 percent), what is equilibrium real GDP?
b) If an increase in the money supply lowered the market interest to 0.03 (3 percent) what effect would this have on equilibrium real output.

In Macroland the Price Level Is Constant and Components of Aggregate