where Ap contains all autonomous expenditures in the model (it will be a function of r) and h is a number. After you find this h, use it like we used c in our model in class to find the multiplier. Derive the equation for the autonomous planned spending schedule, Ap. b. Derive the equation for the IS curve. с. d. Calculate the slope of the IS curve, Ar/AY. (Hint: Use the equation of the IS curve to compute AY/Ar. Then use the fact that the slope of the IS curve, Ar/AY, equals the inverse of ΔΥΔ.)
where Ap contains all autonomous expenditures in the model (it will be a function of r) and h is a number. After you find this h, use it like we used c in our model in class to find the multiplier. Derive the equation for the autonomous planned spending schedule, Ap. b. Derive the equation for the IS curve. с. d. Calculate the slope of the IS curve, Ar/AY. (Hint: Use the equation of the IS curve to compute AY/Ar. Then use the fact that the slope of the IS curve, Ar/AY, equals the inverse of ΔΥΔ.)
Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter11: Fiscal Policy: The Keynesian View And Historical Development Of Macroeconomics
Section: Chapter Questions
Problem 11CQ
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Transcribed Image Text:2. Assume the following equations summarize the structure of an economy.
C= Ca+0.85 (Y –T)
Ca= 260 – 10r
T= 200 + 0.2Y
(M/ P)d = 0.25Y – 25r
M /P = 2,125
Ip = 1,500 – 30r
G=1,700
NX = 500 – 0.08Y
Transcribed Image Text:where Ap contains all autonomous expenditures in the model (it will be a function of r) and h is a
number. After you find this h, use it like we used c in our model in class to find the multiplier.
Derive the equation for the autonomous planned spending schedule, Ap.
b.
Derive the equation for the IS curve.
с.
d.
Calculate the slope of the IS curve, Ar/AY. (Hint: Use the equation of the IS curve to
compute AY/Ar. Then use the fact that the slope of the IS curve, Ar/AY, equals the inverse of
ΔΥΔ.)
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