he following equations describe an economy. Y=C+I+G C=120+0.6(Y-T) I=100-10r, G=60 T=40 M/P=Y-20r. M=600 P=20 a. Derive the equations for IS and LM curves. b. Find the equilibrium level of income and the equilibrium interest rate. c. Suppose government expenditure increases by 50%. Find the equilibrium interest rate and income.

he following equations describe an economy. Y=C+I+G C=120+0.6(Y-T) I=100-10r, G=60 T=40 M/P=Y-20r. M=600 P=20 a. Derive the equations for IS and LM curves. b. Find the equilibrium level of income and the equilibrium interest rate. c. Suppose government expenditure increases by 50%. Find the equilibrium interest rate and income.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section11.B: Algebraic Treatment Of Taxes And Fiscal Policy

Problem 1TY

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