Unformatted text preview: ; 000 ± 2 K + N , N = ± 8 ; 750 + 2 K , 2 N = ± 17 ; 500 + 4 K . Setting ± 17 ; 500 + 4 K = 35 + K gives 3 K = 17 ; 535 , which yields K = 5845 . Then N = 2940 4. C d = 3000 ± 2000 r + 0 : 10 Y I d = 1000 ± 4000 r (a) Recall the formula that S d = Y ± C d ± G , 5000 ± [3000 ± 2000 r +0 : 10 Y ] ± 1000 , 500 + 2000 r . Setting S d = I d gives 500 + 2000 r = 1000 ± 4000 r , which can be solved to get r & = 0 : 0833 . (b) Plugging this value of r & into the equations for consumption and investment gives C & = 3333 , I & = 667 , and S & = 667 . (c) Follow the same steps as above with the new equation for desired consumption to get: r & = 0 : 05 , C & = 3200 , I & = 800 , and S & = 800 . 1...
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 Spring '07
 MBIEKOP
 Macroeconomics, Interest Rates, Time Value Of Money, Nominal Interest Rate, Mathematical finance

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