1- Consider the following IS-LM model:I= 150 + 25Y - 1000i,(M/P 2Y 8000i,G=250,T= 200C=200 + 25YD.NX 0,M/P = 1600.a) Derive the IS relationb) Derive the LM relation.c) Solve for equilibrium real output (Y*).d) Solve for the equilibrium interest rate (i*)e) Solve for the equilibrium values of C and I, and verify the value you obtained for Y byadding C, I, and G.) Now suppose that the money supply increases to M/P =1,840. Solve for Y, i c, and T, anddescribe in words the effects of an expansionary monetary policy.g) Set M/P equal to its initial value of 1,600. Now suppose that government spendingincreases to G = 400. Summarize the effects of an expansionary fiscal policy on Y, 1. C.h) The expansionary fiscal policy in part (g) have resulted in large budget deficit (T= G =200 – 400 = -200). Suggest a policy mix to decrease fiscal deficit to achieve a balancedbudget (T = G = 0).b(Ctrl) -立

1- Consider the following IS-LM model: I= 150 + 25Y - 1000i, (M/P)=2Y - 8000i, G=250, T=200. C=200 + 25YD NX = 0 M/P = 1600. %3D a) Derive the IS relation b) Derive the LM relation c) Solve for equilibrium real output (Y*).

1- Consider the following IS-LM model: I= 150 + 25Y - 1000i, (M/P)=2Y - 8000i, G=250, T=200. C=200 + 25YD NX = 0 M/P = 1600. %3D a) Derive the IS relation b) Derive the LM relation c) Solve for equilibrium real output (Y*).

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter8: The Keynesian Model

Section: Chapter Questions

Problem 9SQP

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Solve part (f), part (g) and part (h).
1- Consider the following IS-LM model: G=250, T=200, 1=150+ 25Y- 1000i, (M/P) = 2Y - 8000i, C=200 +25YD, M/P = 1600. NX 0, a) Derive the IS relation. b) Derive the LM relation. c) Solve for equilibrium real output (Y*). D(Ctrl) -
Consider the following IS–LM model: C = 100 + .25YD I = 50 + .25Y - 1000i G = 150 T = 100 (M/P) d = 2Y - 8000i (M/P)s = 1000 a. Derive the IS relation b. Derive the LM relation c. Solve for equilibrium real output. d. Solve for the equilibrium interest rate e. Solve for the equilibrium values of C and I f. now suppose that the money supply increases to M/P = 1010. Solve for T, f. suppose that government spending increases to G = 155 What is the value of money supply? g. From what we studied, which policy, expansionary fiscal policy or expansionary monetary policy will undoubtedly increase investment.
2. Consider the following IS-LM model: C = 200+ 0.25Ya I = 150+ 0.25Y - 1000i G = 250 T = 200 d M (1) MS = 3200 and P = 2 = 2Y - 8000i a. Derive the IS relation (Y in terms of i) C. Solve for equilibrium real output. b. Derive the LM relation (Y in terms of i)
I need help with e, f and g
6) Consider the following IS-LM model: C = 200+ 0.25YD I = 150+ 0.25Y -1000i G = 250 T = 200 M = 2Y - 8,000i M = 1,600 P a. Derive the IS relation. b. Derive the LM relation. c. Solve for the equilibrium real output. d. Solve for the equilibrium interest rate. e. Solve for the equilibrium values of C and I and verify the value you obtained for Y by adding up C, I, and G. M 1,840 f. Now suppose that the money supply increases to P Solve for Y, i, C, and I, and describe in words the effects of an expansionary monetary policy. M P g. Set 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.
a) consider the following IS–LM model: C = c1(Y - T) I = b1Y - b2i M/P = d1Y - d2i Solve for equilibrium output. Assume c1 + b1 < 1. b) Solve for the equilibrium interest rate. (Hint: Use the LM relation.) c) Solve for investment.
q7
Suppose the economy of Ghana in 2020 was characterized by C = ¢400m + 0.75(Y-T); I = ¢400m - 20r; G = ¢200m; T = ¢200m; Ms = ¢250m/P; Md = 0.25Y - 10r a. Derive the IS and LM curve equations. Give a brief explanation as to why they are positively or negatively sloped. b. Calculate equilibrium output and interest rates (in this case assume P=1). Econ313 2020/2021 PROBLEM SET 2 Page 1 of 2 c. Suppose the government of Ghana in the second half of 2020 spent an additional ¢50m to mitigate the impact of the COVID pandemic on households and businesses and government tax revenue declined by 10% as a result of the lockdown in Ghana what will be the new equilibrium output? d. Will the policy in (c) above have an impact on interest rate? Briefly explain. e. What is the amount of the fiscal deficit incurred as a result of the government fiscal policies as pursued in (c) above?
The consumption function of the economy of Macro-land is given by ? = 200 + 0.75(? − ?)The investment function is given by ? = 200 − 25? . Government purchases and taxes are both 100. (a) Find the equation of the IS curve (b) The money demand function in Macro-land is given byMd= ? − 100? The nominal money supply M is 1,000 and the price level is 2. Find the equation of theLM curve (c) Find the interest rate and income for which the goods and services and money marketsare simultaneously in equilibrium. (d) Suppose the government purchases are raised from 100 to 150. What are the newequilibrium interest rate and income? (e) Suppose that the money supply is raised from 1,000 to 1,200. What are the newequilibrium interest rate and national income? (f) How will fiscal expansion in the country (Macro-land) affect national income,employment, interest rate, price level and real money balance under the Keynesianaggregate supply condition? NB: Kindly answer all questions
Problem 3: IS-LM model An economy is initially described by the following equations: C=500+0.75(Y- T) I=1,000-50r M/P=Y-200R G=1,000 T=1,000 M=6,000 P=2 a. Derive and graph the IS curve and the LM curve. Calculate the equilibrium interest rerate and income. Label that point A on your graph. b. Suppose a newly elected government cuts taxes by 20 percent. Assuming that the money supply is held constant, what are the new equilibrium interest rate and income? What is the tax multiplier? c. Now assume that the central bank adjusts the money supply to hold the interest rate constant. What is the new equilibrium income? What must the new money supply be? What is the tax multiplier? d. Now assume that the central bank adjusts the money supply to hold income constant. What is the new equilibrium interest rate? What must the money supply be? What is the tax multiplier? e. Show the equilibria you calculated in parts (b), (c), and (d) on the graph you drew in part (a). Label them points B, C, and…
Assume a model economy with the following parameters: C=300+0.25 Yd I=250+0.5Y-2500i G=350 T=300 (M/P)d= 4Y-16,000i (M/P)s= 880 Derive the IS and LM relations and solve for equilibrium real output and equilibrium interest rate.