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2. The following equations describė an ecoHomy Income identity: Y = C+1+G+ NX Consumption function: C= 80 + 0.63Y Investment function: |= 750 - 2,000r Government spending: G- 750 Net export function: NX = 425 - 0.1Y - 500r Tax rate: t = 0.3 Money demand function: M = (0.1625Y - 1,000r)P Money supply: M = 600 Price level: P= 1 where Y is output, C is consumption, I is investment, G is government purchases, NX is net exports, M in the first equation is money demand and money supply in the second equation, Pis the price level and r is the real interest rate. C= a+ b(1-t)Y. Show all work for the following questions in a neat and orderly manner. Credit will not be given for unsupported work, such as only an answer. 1. What is the equation that describes the IS curve? 2. What is the equation that describes the LM curve? 3 What are the equilibrium level of income and interest rate? the domand for

2. The following equations describė an ecoHomy Income identity: Y = C+1+G+ NX Consumption function: C= 80 + 0.63Y Investment function: |= 750 - 2,000r Government spending: G- 750 Net export function: NX = 425 - 0.1Y - 500r Tax rate: t = 0.3 Money demand function: M = (0.1625Y - 1,000r)P Money supply: M = 600 Price level: P= 1 where Y is output, C is consumption, I is investment, G is government purchases, NX is net exports, M in the first equation is money demand and money supply in the second equation, Pis the price level and r is the real interest rate. C= a+ b(1-t)Y. Show all work for the following questions in a neat and orderly manner. Credit will not be given for unsupported work, such as only an answer. 1. What is the equation that describes the IS curve? 2. What is the equation that describes the LM curve? 3 What are the equilibrium level of income and interest rate? the domand for

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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2. The following equations describe an economy. Income identity: Y =C+1+G+ NX Consumption function: C = 80 + 0.63Y %3! Investment function: |= 750 - 2,000r Government spending: G = 750 Net export function: NX = 425 - 0.1Y - 500r Tax rate: t = 0.3 Money demand function: M = (0.1625Y - 1,000r)P Money supply: M- 600 Price level: P = 1 where Y is output, C is consumption, I is investment, G is government purchases, NX is net exports, M in the first equation is money demand and money supply in the second equation, P is the price level and r is the real interest rate. C= a+ b(1-t)Y. Show all work for the following questions in a neat and orderly manner. Credit will not be given for unsupported work, such as only an answer. 1. What is the equation that describes the IS curve? 2. What is the equation that describes the LM curve? 3. What are the equilibrium level of income and interest rate? 4. What are the equilibrium levels of consumption, investment, net exports, and the demand for money? 5. What is the value of the simple multiplier with taxes (assuming a closed economy)? 6. What is the aggregate demand curve (where Pis on the left-hand side of the equation and Y is on the right-hand side)?
Transcribed Image Text:2. The following equations describe an economy. Income identity: Y =C+1+G+ NX Consumption function: C = 80 + 0.63Y %3! Investment function: |= 750 - 2,000r Government spending: G = 750 Net export function: NX = 425 - 0.1Y - 500r Tax rate: t = 0.3 Money demand function: M = (0.1625Y - 1,000r)P Money supply: M- 600 Price level: P = 1 where Y is output, C is consumption, I is investment, G is government purchases, NX is net exports, M in the first equation is money demand and money supply in the second equation, P is the price level and r is the real interest rate. C= a+ b(1-t)Y. Show all work for the following questions in a neat and orderly manner. Credit will not be given for unsupported work, such as only an answer. 1. What is the equation that describes the IS curve? 2. What is the equation that describes the LM curve? 3. What are the equilibrium level of income and interest rate? 4. What are the equilibrium levels of consumption, investment, net exports, and the demand for money? 5. What is the value of the simple multiplier with taxes (assuming a closed economy)? 6. What is the aggregate demand curve (where Pis on the left-hand side of the equation and Y is on the right-hand side)?
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