Consider an economy described by the following equations: C = a + b(Y – T) | = cY – di + e Md = fY – gi P || - G = G Ms = M P P = 1 1. Derive an expression for the IS-curve and explain wha does this equation represent. 2. Derive an expression for the LM-curve and explain what does this equation represent. 3:Compute the level of private saving when both the goods and the fnancial market are in equilibrium. Symbols have their usual meanings. Please provide mathematical proof.

Consider an economy described by the following equations: C = a + b(Y – T) | = cY – di + e Md = fY – gi P || - G = G Ms = M P P = 1 1. Derive an expression for the IS-curve and explain wha does this equation represent. 2. Derive an expression for the LM-curve and explain what does this equation represent. 3:Compute the level of private saving when both the goods and the fnancial market are in equilibrium. Symbols have their usual meanings. Please provide mathematical proof.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 2TY

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