2. Suppose, • C=0.8(1-t)Y • t=0.25 • | = 900 – 50i • G=800 a) What is the equation for IS curve b) What is the effect of increase in govt. expenditure by 100 on the IS equation & IS curve? Show the effect using graphs c)What will happen to the slope of IS curve if Investment becomes more sensitive tO interest, say = 900 – 60i ? -

2. Suppose, • C=0.8(1-t)Y • t=0.25 • | = 900 – 50i • G=800 a) What is the equation for IS curve b) What is the effect of increase in govt. expenditure by 100 on the IS equation & IS curve? Show the effect using graphs c)What will happen to the slope of IS curve if Investment becomes more sensitive tO interest, say = 900 – 60i ? -

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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