. An economy is initially described by the following equations: C = 600 + 0.75(Y - T) I= 1,200 – 50i M/P = Y – 200i G= 2000 T= 2000 M = 4,000 P = 2 a. Derive and graph the IS curve and the LM curve. Calculate the equilibrium interest rate and level of income. Label that point A on your graph. b. Suppose that a newly elected president cuts taxes by 20 percent. Assuming the money
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A: Interest rate: It refers to the rate at which the people can take loans form the banks. The banks…
Q: onsider an economy with the following information: Y = C + I + G, C=180+0.7( Y-T), I= 100-18i + 0.1…
A: From the data given in the question, Y = C+I+G = 180+0.7*(Y-400)+100-18i+0.1Y+400 =…
Q: Any help will be appreciated a. Identify each of the variables and briefly explain the meaning of…
A: Equilibrium is reached at the intersection of IS and LM curves. At the intersection both goods…
Q: Assume the following model of the economy: Y = C + I + G C = 120 + 0.5(Y - T) I = 100 - 10r G =…
A: Given; C = 120 + 0.5(Y - T) I = 100 - 10r G = 50 T = 40 Md = Y - 20 r Ms = 600 P = 2
Q: Suppose that the following system of equations describe the macroeconomy of a hypothetical country:…
A: IS: Y= C(y)+I(i)+G LM: M/p=L(i,y) Marginal propensity to consume=5/6 Tax rate=0.25 Interest…
Q: A closed economy is described by the following system of equations: L(Y,i) = 5Y -40i C = 40+0.5YD T…
A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…
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A: As per the honor code, we are solving only first three parts. a. Household and investment demand…
Q: Assume the equations for the IS curve and LM curves for an economy are: Y= 1,600 – 50r r=Y/50 - 12.…
A: Hi. Since there are multiple questions we will answer the first three questions.
Q: erest rate b) A decrease in investm
A: The IS curve depicts all level sets of output and interest rates at which total investment in turn…
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A: Given, C= 400+0.8(Y−T) I= 600−70r Government Purchase = 400 Government has a balanced budget,…
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Q: Assume the following IS-LM model: Expenditure sector: Money sector: C = 100 + (4/5)YD I = 300 - 20i…
A: Given C = 100+(4/5) YD G = 120 I-= 300-20i TA= (1/4) Y NX = -20 M = 700 P = 2 Md = (1/3) Y+200-10i
Q: Assume the following model of a closed economy: Y = C + I + G C = 120 + .5(Y – T) I = 100 – 10r…
A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: Consider an economy with the following features: Consumption, C = 130 + 0.5Yd Income tax, T= 20 +…
A: We have given Consumption function C=130+0.5YD .... (1) Income tax: T=20+0.2Y…
Q: Assume the equations for the IS curve and LM curves for an economy are: Y= 1,600 – 50r r=Y/50 - 12.…
A: (d) With an increase in the government expenditure the IS curve shifts up whereas the increase in…
Q: Assume the following model of the economy: Y = C + I + G C = 120 + 0.5(Y - T) I = 100 - 10r G =…
A: IS curve is given by the equation: Y = C + I + G LM curve is given by the equation: MPd = MPs =MP To…
Q: Question One Assume the equations for the IS curve and LM curves for an economy are: Y= 1,600 – 50r…
A: IS-LM refers to the model which stands from Investment - saving (i.e. IS) and the Liquidity - money…
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A: (Note: Since 1d and 2 are different only 1d has been solved). Question 1d: The macroeconomic…
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A: In the IS-LM model, IS curve shows equilibrium in the goods market and the LM curve shows…
Q: Consider the economy of Ghana. The consumption function is given by C = 400 + 0.8(Y - T). The…
A: Note:- Since we can only answer up to three subparts, we'll answer first three. Please repost the…
Q: 1.The following graphs show an economy's initial position at point B along its consumption function…
A: The total income is the income received by the individual before paying taxes. The disposable income…
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A: Since you posted a question with multiple sub-parts, we will solve the first three sub-parts for…
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A: In the IS-LM model, IS curve explains the situation of the goods or product market, while LM curve…
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A: Note: There are multiple sub parts for the given question, hence we shall answer the first three for…
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A: Disclaimer :- Since you asked multipart question we are solving the first 3 subparts as per…
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A: The IS curve is downwards sloping to the right which indicates to the fact that the rate of…
Q: Exercise 1 Suppose a closed economy is represented by the following equations: Z= C+I+G C= co + C1x…
A: Co = 250 C1 = 0.6 i = 0.02 G = 150 I = 0.2Y - 5000i T = 100
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A: Interest rate: It is the rate that is charged by a lender of money or credit to the borrower.
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Q: Assume the following IS-LM model: Expenditure sector: C = 100 + (4/5)YD G = 120 I = 300 -…
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Q: 2. Find the IS-LM equilibrium values for aggregate income (Y) and the interest rate (r). Show these…
A: IS stands for investment saving curve. LM stands for liquidity of money curve.
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A: Since you have posted a question with multiple sub-parts, we will solve first three sub parts for…
Q: 3 a) Derive the two expressions for the IS and LM equilibrium relationships respectively. Sketch a…
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Q: Expenditure sector: C = 100 + (4/5)YD G = 120 YD = Y - TA I = 300 - 20i , TA = (1/4)Y, NX =…
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Q: Assume the equations for the IS curve and LM curves for an economy are: Y= 1,600 – 50r r=Y/50 - 12.…
A: IS-LM refers to the model which stands from Investment - saving (i.e. IS) and the Liquidity - money…
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A: IS stands for “investment” and “saving,” and the IS curve represents what’s going on in the market…
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- Assume the following model of the economy: Y = C + I + G C = 120 + 0.5(Y - T) I = 100 - 10r G = 50 T = 40 Md = Y - 20 r Ms = 600 P = 2 Graph both the IS and the LM curves. Use r = 5, 10, 15 What are the equilibrium level of income and equilibrium interest rate?Question 2. Any help will be appreciated a. Identify each of the variables and briefly explain the meaning of each one. b. From the above list, use the relevant set of equations to derive the IS curve. Graph the IS curve on an appropriately labelled graph. c. From the above list, use the relevant set of equations to derive the LM curve. Graph the LM curve on the same graph you used in part (b). d. What is the equilibrium level of income and the equilibrium interest rate?How am I supposed to plot a figure thats not even on the graph and What are the answers to the questions that were not answered. These questions: Suppose that for every increase in the interest rate of one percentage point, the level of investment spending declines by $0.5 billion. Based on the changes made to the money market in the previous scenario, the new interest rate causes the level of investment spending to by . Taking the multiplier effect into account, the change in investment spending will cause the quantity of output demanded to by at every price level. The impact of an increase in government purchases on the interest rate and the level of investment spending is known as the effect. Use the purple line (diamond symbol) on the graph at the beginning of this problem to show the aggregate demand curve (AD3AD3) after accounting for the impact of the increase in government purchases on the interest rate and the level of…
- Consider an economy described by the following equations: Y=C+I+G C=100+.75(Y−T)C=100+.75(Y−T) I=500−50rI=500−50r G=125G=125 T=100T=100 Where: Y is GDP, C is consumption, I is investment, G is government spending, T is taxes and r is the rate of interest. Questions: a. What is the value of the multiplier? b. What is the equilibrium equation for Y? Show solution. c. Suppose the Central Bank policy is to adjust the money supply to maintain the interest rate at 4 percent,so r=4. What is the value of output? d. Assuming that no change in fiscal policy, what is the effect of a reduction in interest rate from 4 percent to 3 percent on equilibrium output. e. In this case, explain the policy that was used by the policymaker to target the aggregate demand.Q5.The following equations describe an economy. a. Identify each of the variables and briefly explain their meaning.b. From the above list, use the relevant set of equations to derive the IS curve. Graph the IS curve on an appropriately labeled graph.c. From the above list, use the relevant set of equations to derive the LM curve. Graph the LM curve on the same graph you used in part (b).d. What are the equilibrium level of income and the equilibrium interest rate?The following equations describe an economy. Y = C + I + G. C = 120 + 0.5( Y - T ). I = 100 - 10r. G = 50. T = 40. ( M/ P) d = Y - 20r. M = 600. P = 2. What are the equilibrium level of income and the equilibrium interest rate? If the government increases government spending by 45, what will be the new equilibrium level of income and equilibrium interest rate?
- An economy is described by the following set of equations: C = 2,600 + 0.8(Y – T) – 5,000r, I = 3,000 – 15,000r, G = 800, X = M = 0, T = 1,000 + 0.3Y. The real interest rate, expressed as a decimal, is 0.10 (that is, 10 percent). Suppose the flow of GDP consistent with full employment is 10,000. What real interest rate would achieve full employment?Assume the following model of a closed economy: Y = C + I + G C = 120 + .5(Y – T) I = 100 – 10r G = 75 T = 50 (M/P)d = Y – 30r Ms = 700 P = 2 Derive the equation for the IS curve, showing Y as a function of r alone. Derive the equation for the LM curve, showing Y as a function of r alone. Graph both the IS and the LM curves. What are the equilibrium level of income and equilibrium interest rate? (Y = 584, r = 7.8)Consider an economy with the following information: Y = C + I + G, C=180+0.7( Y-T), I= 100-18i + 0.1 Y, T =400, G=400, P=1, M=5400, L=6Y -120i, M/P=L Derive the IS equation. Derive the LM equation. Solve the IS-LM to obtain the equilibrium output and the interest rate
- Assume the following model of the economy: Y = C + I + G C = 120 + 0.5(Y - T) I = 100 - 10r G = 50 T = 40 Md = Y - 20 r Ms = 600 P = 2 What are the equilibrium level of income and equilibrium interest rate?The following equations describe an economy. Y=C+I+G C=120+0.6(Y-T) I=100-10r, G=60 T=40 M/P=Y-20r. M=600 P=20 a. Derive the equations for IS and LM curves. b. Find the equilibrium level of income and the equilibrium interest rate. c. Suppose government expenditure increases by 50%. Find the equilibrium interest rate and income.The consumption function is given by: C = 200+0.75 (Y-T). The investment function is I = 200-25r. G =100 T=100 Suppose instead that money supply is raised from 1,000 to 1,200. How much does the LM curve shift? What are the new equilibrium interest rate and level of income?