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Consider the following classical economy: Desired consumption: C9 = 320 + 0.500 Y - 200r. Desired investment: P = 200 - 300r.

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Answer #1

Y = C + I + G + NX

900 = (320 + 0.5Y - 200r) + (200 - 300r) + 100 + (140 + 0.1Y - 0.5e)

900 = 320 + 0.5(900) - 200r + 200 - 300r + 100 + 140 + 0.1(900) - 0.5(18 + 600r)

900 = 320 + 450 - 200r + 200 - 300r + 100 + 140 + 90 - 9 - 300r

900 = 1291 - 800r

800r = 1291 - 900

800r = 391

r = 391 / 800

r = 0.48 is the answer.

e = 18 + 600r

e = 18 + 600(0.48)

e = 18 + 288 = 306 is the answer.

C = 320 + 0.5Y - 200r

C = 320 + 0.5(900) - 200(0.48)

C = 320 + 450 - 96

C = 674 is the answer.

I = 200 - 300r

I = 200 - 300(0.48)

I =200 - 144 = 56 is the answer.

NX = 140 + 0.1Y - 0.5e

NX = 140 + 0.1(900) - 0.5(306)

NX = 140 - 90 - 153

NX = -103 is the answer.

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