Question
Microeconomics Question on Market structure
Given the following information related to product and money markets,
Product MarketC=300+0.8(Y–T)\T=200+0.2(Y)\I0=300;Go=400 Money MarketPM0=0.4Y−200i\M0=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.)