Question: the income identity for a closed economy says that y...
The income identity for a closed economy says that
Y = C+I+G
Assume that in the Economy of Berkeley GDP (Y) is equal to 6,000 and consumption (C) is given by the equation:
C = 600 + 0.6(Y-T)
In addition, investment (I) is given by the equation
I = 2,000 - 100r
where r is the real of interest rate in percent. Taxes (T) are 500 and government spending (G) is also 500. What are the equilibrium values of C, I, and r?