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The linear equation that represents all combinations of income and interest rates
that maintain an equilibrium in the market for goods in the economy.
The system of equations are
Multiply the equation by
and add to the equation
to eliminate
.
.
.
The rate of interest is .
Substitute in equation
.
.
Therefore, the equilibrium level of income and interest rates is million and
.
\
The equilibrium level of income and interest rates is million and
.