please answer for question E, F and G 1. Consider the following IS – LM model:C = 200 + 0.25Y,I = 150 + 0.25Y – 1000iG = 250T - 200(M/PY - 2Y – 8000iM/P = 1600a. Derive the IS relation. (Hint: You want an equation with Y on the left side andeverything else on the right.)b. Derive the LM relation. (Hint: It will be convenient for later use to rewrite thisequation with i on the left side and everything else on the right.)c. Solve for equilibrium real output. (Hint: Substitute the expression for the interestrate given by the LM equation into the iS equation and solve for output.)d. Solve for the equilibrium interest rate. (Hint: Substitute the value you obtained forY in part (c) into either the IS or LM equations and solve for i. If youralgebra is correct, you should get the same answer from both equations.)e. Solve for the equilibrium values of C and I, and verify the value you obtainedfor Y by adding C, 1, and G.f. Now suppose that the money supply increases to M/P-1,840. Solve for Y,i,c,and T, and describe in words the effect of an expansionary monetary policy.g. Set M/P equal to its initial value of 1,600. Now suppose that governmentspending increases to G=400. Summarize the effects of an expansionary fiscalpolicy on Y,i, and C.

IS the consists of different sets of interest rates and output at which the total investment equals…

e. Solve for the equilibrium values of C and 1, and verify the value you obtained for Yby adding C, 1, and G. f. Now suppose that the money supply increases to M/P-1,840 . Solve for Y,i,c, and T, and describe in words the effect of an expansionary monetary policy. g. Set M/P equal to its initial value of 1,600. Now suppose that government spending increases to G-400. Summarize the effects of an expansionary fiscal policy on Y,i, and C.

e. Solve for the equilibrium values of C and 1, and verify the value you obtained for Yby adding C, 1, and G. f. Now suppose that the money supply increases to M/P-1,840 . Solve for Y,i,c, and T, and describe in words the effect of an expansionary monetary policy. g. Set M/P equal to its initial value of 1,600. Now suppose that government spending increases to G-400. Summarize the effects of an expansionary fiscal policy on Y,i, and C.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter5: Business And Economic Forecasting

Section: Chapter Questions

Problem 4E

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