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Consider an economy that is described by the following classical model.

Y = AxKXL(1-a). (A = 1.355, α = 0.33) C = 10 + 0.55 * (Y-T) 2r K-10, L = 30

(a) In this economy compute the equilib- rium interest rate r (b) Compute the MPC of the consumption function.2 (c) Calculate the equilibrium interest rate when = T-5.5.

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е е..3 As l ·3.ss--ㄧ一 28 29 28.29-22 :8/ 1.-04 b) Mec 25 21.a 21 03 L 2a 23 1.92

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