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5) A Keynesian economy is described by the following equations: Cd=250+0.5(YT)250rId=250250
rG=300T=300L=0.5Y500r+eM=3000Y=1250e=0 a. Calculate the values of the real interest rate,
the price level, consumption, and investment for the economy in general equilibrium. b. Now
suppose government purchases increase to 350 with no change in taxes. What will be the real
interest rate, the price level, output, consumption, and investment in the short run? c. What will be
the real interest rate, the price level, output, consumption, and investment in the long run?

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  • 1. 5) A Keynesian economy is described by the following equations: Cd=250+0.5(YT)250rId=250250 rG=300T=300L=0.5Y500r+eM=3000Y=1250e=0 a. Calculate the values of the real interest rate, the price level, consumption, and investment for the economy in general equilibrium. b. Now suppose government purchases increase to 350 with no change in taxes. What will be the real interest rate, the price level, output, consumption, and investment in the short run? c. What will be the real interest rate, the price level, output, consumption, and investment in the long run?