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22 Aug 2020
Below is an IS-LM Model:
C = 250 + 0.20Yd
I = 150 + 0.20Y – 1000r
G = 250
T = 250
(M / P) d = 2Y – 8000r
(M / P) s = 1600
a) Derive the IS and LM relations
b) Find the equilibrium level of income (Y) and interest rate (r).
c) Find the values of Consumption and Investment in equilibrium.
d) Suppose there is an expansionary monetary policy and money supply( (M / P)s increases to 1840. Find the effect of this on equilibrium levels of income (Y), interest rate (r), consumption, and investment.
Below is an IS-LM Model:
C = 250 + 0.20Yd
I = 150 + 0.20Y – 1000r
G = 250
T = 250
(M / P) d = 2Y – 8000r
(M / P) s = 1600
a) Derive the IS and LM relations
b) Find the equilibrium level of income (Y) and interest rate (r).
c) Find the values of Consumption and Investment in equilibrium.
d) Suppose there is an expansionary monetary policy and money supply( (M / P)s increases to 1840. Find the effect of this on equilibrium levels of income (Y), interest rate (r), consumption, and investment.
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2 Jun 2021
