3. Calculate the slope of the IS curve given the following two equations. (Hint: The IS curve isthe relationship between Y and r, so you need to isolate Y; on one side.)C+ = 0.6(Y; – G+) + 0.5(Y+1 – G+1) – 10rtIt = -20rt + At+1 – 0.2K{Gt = G+1= 10

Ct = 0.6 (Yt - Gt ) + 0.5 (Yt+1 - Gt+1 ) - 10rt (Consumption function ) It = -20rt + At+1 - 0.2Kt…

Answered: 3. Calculate the slope of the IS curve…

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter1: What Is Economics

Section1.A: Using Graphs: A Review

Problem 4TY

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3. Calculate the slope of the IS curve given the following two equations. (Hint: The IS curve is the relationship between Y and r, so you need to isolate Yt on one side.) C = 0.6(Y - G+) + 0.5(Y+1 - Gt+1) – 10r I = -20rt + At+1 - 0.2Kt Gt = G+1 = 10