5. Derive the functional form of the IS curve for the following economy: [Hint: Use the equilib- rium condition and isolate Y on LHS and all other terms on RHS, i.e., Y ISo + ISı(r)] C = 100+0.8(Y-T), G = 150, I = 500 - 20r, T = 100

5. Derive the functional form of the IS curve for the following economy: [Hint: Use the equilib- rium condition and isolate Y on LHS and all other terms on RHS, i.e., Y ISo + ISı(r)] C = 100+0.8(Y-T), G = 150, I = 500 - 20r, T = 100

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter4: Demand And Supply: Applications And Extensions

Section: Chapter Questions

Problem 8CQ

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5. Derive the functional form of the IS curve for the following economy: [Hint: Use the equilib-
rium condition and isolate Y on LHS and all other terms on RHS, i.e., Y = ISo + IS1(r)]
C = 100+ 0.8(Y-T), G = 150, I = 500-20r, T = 100

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