A. Given: C= 700 + .80 (1- t)Y t-0.25 I= 210 -75i G= 1000 TR=100 L= 0.20Y- 40i M/P = 800 Compute: 1. The equilibrium income and the equilibrium interest rate 2. Show the graph of the IS -LM equilibrium 3. If G is increased to 1,500, what will be the new level of equilibrium income and interest rate? What happens to the IS curve?

A. Given: C= 700 + .80 (1- t)Y t-0.25 I= 210 -75i G= 1000 TR=100 L= 0.20Y- 40i M/P = 800 Compute: 1. The equilibrium income and the equilibrium interest rate 2. Show the graph of the IS -LM equilibrium 3. If G is increased to 1,500, what will be the new level of equilibrium income and interest rate? What happens to the IS curve?

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter13: Monetary Policy: Conventional And Unconventional

Section: Chapter Questions

Problem 4TY

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