Consider the following data about the goods market in a hypothetical closed economy. Assume that government expenditure is constant at $200 million. Also assume that there is equilibrium in the goods market at all times.

Some of the pairs of interest rate and aggregate output that determine equilibrium in the MONEY market include: 2% and $300 million, 4% and $500 million, 6% and $700 million, and 8% and $900 million. Which of the following is NOT consistent with the available data?

A. Both the goods market and the money market have an equilibrium aggregate output of $700 million.

B. There is a positive relationship between interest rates and aggregate output in the money market; the opposite is true in the goods market.

C. Based on the available data, we cannot calculate the equilibrium in the IS-LM diagram.

D. The equilibrium interest rate in the IS-LM diagram is 6%.

I beleive the answer is A butsince ther is no way of telling the equilibrium, am I correct?

Based on the available data, we can analyze the relationship between interest rates and aggregate output in the money market. The given pairs show that as interest rates increase, aggregate output also increases. This implies a positive relationship between interest rates and aggregate output in the money market.

In the goods market, the equilibrium aggregate output is not explicitly provided or mentioned in the given data. Therefore, we cannot conclude that the equilibrium aggregate output in the goods market is $700 million or any other specific value based on the provided information alone. Hence, statement A ("Both the goods market and the money market have an equilibrium aggregate output of $700 million") is inconsistent with the available data.

Statement B correctly reflects the positive relationship between interest rates and aggregate output in the money market, which is opposite to the relationship in the goods market, where higher interest rates tend to reduce aggregate output. Therefore, statement B is consistent with the available data.

Statement C claims that we cannot calculate the equilibrium in the IS-LM diagram based on the available data. Although the provided information does not explicitly give the equilibrium in the IS-LM diagram, it does provide enough information to analyze the relationship between interest rates and aggregate output in the money market. So, statement C is not accurate.

Given that the equilibrium interest rates and aggregate output in the money market are provided, we can determine the equilibrium interest rate in the IS-LM diagram by plotting the combinations of interest rates and aggregate output on the LM curve. Since the data includes an interest rate of 6%, the equilibrium interest rate in the IS-LM diagram could be 6%. Therefore, statement D is consistent with the available data.

In conclusion, the statement that is NOT consistent with the available data is statement A.

Yes, you are correct. The information provided does not give enough evidence to determine the equilibrium in the goods market, so we cannot say whether the goods market equilibrium aggregate output is $700 million. Therefore, option A is not consistent with the available data.