Question

If an economy is described as: M/P = Y-100r G = T = 1000 M =...

If an economy is described as:

M/P = Y-100r

G = T = 1000

M = 3000

P = 1

I = 1000-100r

C = 600+0.8(Y-T)

What is the equilibrium interest rate and level of income?

If the government increases tax and spending by 10%, what is the new interest rate and level of income?

If the central bank needs to change the interest rate to the initial rate, what is the money supply? what is the new level of income?

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