A small open economy is described by the following equations: C = 50+0.75(Y-T), I = 200 -20r, NX = 200-50ɛ, M/P = Y- 40r E = 200, T = 200, M = 3000, P = 3, r* = 5

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
Chapter7: Taking The Nation's Economic Pulse
Section: Chapter Questions
Problem 1CQ
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A small open economy is described by the following equations: C = 50+0.75(Y-T), I = 200 -20r, NX = 200-50ɛ, M/P = Y- 40r G
= 200, T = 200, M = 3000, P = 3, r* = 5
%3D
%3D
a. Derive and graph the IS* and LM* curves.
Transcribed Image Text:A small open economy is described by the following equations: C = 50+0.75(Y-T), I = 200 -20r, NX = 200-50ɛ, M/P = Y- 40r G = 200, T = 200, M = 3000, P = 3, r* = 5 %3D %3D a. Derive and graph the IS* and LM* curves.
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