In a two sector model, C= $100+0.80Y, I = $150 – 6r and Md = 0.2Y – 4r.

If money supply is Ms=$150 find the followings.

• Equation for equilibrium in goods market

• Equation for equilibrium in money market
• Interest rate and income level at which economy is in equilibrium
• How to achieve full employment level if the full employment
output is $1200.
• Find the equilibrium income, interest rate, investment and
consumption for the following functions.
• Goods market equilibrium: Y=$950 – 50r
• Money Market Equilibrium: Y= $500 + 25r
• Consumption Function: C= $40+0.80Yd
• Investment Function: I=$140 -10r
• Money supply M= $100
• Money Demand Function: L=0.20Y-5r
• Tax = $50 G=$50
• Find the IS schedule if government spending increases from $50 to
$80. Find the equilibrium income, interest rate, investment and
consumption.
As per the following information, estimate the impact of
increase in government expenditure by $10 on income and
what will be the balance budget multiplier.
C = 20 +0.80Yd T= 10+0.20Y I=50 and G=20
As per the information given below, bring out the level of economic
equilibrium. If the economy is not in a state of equilibrium, what needs of
done?

Consumption Function: C= $85+0.85Yd Investment Function: I=$75 -5r

Tax Function: T=25+0.33Y Government Expenditure: 275
Nominal Money supply M= $300
Money Demand Function: L=0.26Y-7r
Production function is Y= 14N – 0.05N2
Labour Demand function: Nd =200 – 12(w/p)
Labour supply equation is Ns =75 +6 (w/p)
Price Level : 2
Indian economy is targeting a GDP growth of 10%. With the following
information, estimate the level of money supply, domestic and foreign
savings and investment require to achieve the targeted GDP growth
rate.

• Target Inflation: 4.5% Target GDP Growth: 10%

• Velocity of money: 2% Capital-Out ratio: 3.5
• Marginal Propensity to Consume: 72%