Quesiton: 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
a. If G = 1,200 and M = 800, calculate the equilibrium values of output and interest rates, if P =1.
b. If the full-employment level of output is 8000, find the following:
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.