You are given the following information for a closed economy in
a general equilibirum context.
Cd = 5000 + 0.8Y - 80,000r
, Id = 1000 - 45,000r.
Md/P = 0.9Y - 4000i
, π e = 0.05, G = 450,
Y-bar= 1000, and M = 3000.
a) Calculate the general equilibrium values of the real interest
rate and the price level.
b) Explain what general equilibrium means in the IS-LM framework
and how it is attained.
c) What kind of...