Suppose that the goods market is given by:
C= c0 + c1 (Y-T)
I = b0 + b1Y -b2i
with 0 < c1 < 1, 0 < b1 < 1, (c1 + b1) < 1, 0 < b2 < 1, and G,T are exogenous constants.
Financial market is given by:
a)In goods market;sY d =C d + I d +G0Y =c 0+ c 1 (Y −T )+ b 0+b 1 Y −b 2 i Y −c 1Y −b 1 Y =c 0+c 1T +b 0−b 2iY (1−c 1−b 1 )=c 0+c 1T +b 0−b 2 i When more loanable funds are...
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