Question

Y = K^0.5L^0.5, with K = 10,000, and L = 400. The consumption function is C = 0.6(Y - T), G = 500, T = 0.25Y, and I = 1,000 - 40r. If government spending falls to 420, then the real interest rate will _____, and investment will rise by 80.

Name: y k05l05 with k 10000 and l 400 the consumption function is c 06y t g 500 t 025y and i 1000 40r if government spending falls to 420 then the real interest rate will and investment will 67717
Uploaded: 2023-06-12T03:02:39-08:00
Duration: 5 min 41 s
Channel: Aarya B
Description: y k05l05 with k 10000 and l 400 the consumption function is c 06y t g 500 t 025y and i 1000 40r if government spending falls to 420 then the real interest rate will and investment will 67717

          Y = K^0.5L^0.5, with K = 10,000, and L = 400. The consumption function is C = 0.6(Y - T), G = 500, T = 0.25Y, and I = 1,000 - 40r. If government spending falls to 420, then the real interest rate will _____, and investment will rise by 80.

Added by Marta G.

Principles of Economics

Gregory Mankiw 8th Edition

Instant Answer

Solved by Expert Aarya B

06/12/2023

Step 1

First, we need to find the value of Y using the given values of K and L in the production function: Y = K0.5L0.5 = 10,0000.5 x 4000.5 = 6324.56 Show more…

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Y = K^0.5L^0.5, with K = 10,000, and L = 400. The consumption function is C = 0.6(Y - T), G = 500, T = 0.25Y, and I = 1,000 - 40r. If government spending falls to 420, then the real interest rate will _____, and investment will rise by 80.