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Question

Microeconomics Question on Market structure

Given the following information related to product and money markets,
Product MarketC=300+0.8(YT)\T=200+0.2(Y)\I0=300;Go=400\text{Product Market}\\\C = 300 +0.8(Y – T)\\\T = 200 +0.2(Y)\\\I_0 = 300; G_o = 400 Money MarketM0P=0.4Y200i\M0=900;P=1(Fixed)\text{Money Market}\\\\\frac{M_0}P=0.4Y-200i\\\M_0=900; P = 1 (Fixed)
where Y Income, C = Consumption, T = Tax, I0 = Autonomous Investment, G0 = Autonomous Government Expenditure, M0 = Nominal Money Demand, P = Price, and i = Interest Rate.
The equilibrium level of interest rate (in %) is ______ (round off to 2 decimal places)

Answer

The correct answer is: 16.65 or 16.69 (approx.)