Consider a hypothetical economy with the following model. Goods Market Money Market C = 200 + 0.75(Y − T) (M/P)d = Y − 100r I = 200 − 25? Ms = 1000 G = 100 P = 2 T = 100 A. Derive an expression for the IS curve and an expression for the LM curve. B. On the same set of axes, draw the IS and LM curve. C. Find the level of interest and income that ensures a simultaneous equilibrium in the goods and money market.
Consider a hypothetical economy with the following model. Goods Market Money Market C = 200 + 0.75(Y − T) (M/P)d = Y − 100r I = 200 − 25? Ms = 1000 G = 100 P = 2 T = 100 A. Derive an expression for the IS curve and an expression for the LM curve. B. On the same set of axes, draw the IS and LM curve. C. Find the level of interest and income that ensures a simultaneous equilibrium in the goods and money market.
Chapter22: Aggregate Demand And Aggregate Supply
Section: Chapter Questions
Problem 2P
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QUESTION TWO
Consider a hypothetical economy with the following model.
Goods Market
C = 200 + 0.75(Y − T) (M/P)d = Y − 100r
I = 200 − 25? Ms = 1000
G = 100 P = 2
T = 100
A. Derive an expression for the IS curve and an expression for the LM curve.
B. On the same set of axes, draw the IS and LM curve.
C. Find the level of interest and income that ensures a simultaneous equilibrium in the goods and money market.
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