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Consider the following economy:

PLEASE FOLLOW DIRECTIONS
AND LABEL ANSWERS E & F: 1,2, and 3

           
C = 1200 + .63 Y

           
I = 1750 – 1500 R

           
NX = 50 -.1 Y – 500 R

           
M = (.1625 Y – 1000 R) P

  

e. If G = 1,200 and M = 800, calculate
the equilibrium values of output and interest
     rates, if P =1. (10 pts)

f. If the full-employment level of
output is 8000, find the following: (15 pts)

1. Fiscal policy to restore
full-employment.

2. Monetary police to restore
full-employment.

3. What is the price level in the long
run if we do nothing.