a. Derive the IS relation. (Hint: You want an equation with Y on the left side and everything else on the right.) D-0.25 (Y-200) + 150 - 0.254-1000(i) + 250+ -0.254-5o+150 +0.25Y1-1000i + 250G 50-1000 b. Derive the LM relation. (Hint: Write this equation with i on the left side and everything else on the right.)

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4. Consider the following IS-LM model:
Consumption:C = 200 + .25YD
Investment : I = 150 + .25Y -1000i
Taxes : T = 200
Government Expenditures : G = 250
Demand for Real Money Balances : (M/P)d = 2Y -8000i
Money Supply : M/P = 1600
a. Derive the IS relation. (Hint: You want an equation with Y on the left side and everything
else on the right.)
9-C-1+G
Y= 200 0.25 (Y-200) + 150 0.25 4-1000(1) +250+
Y- 200 0.254-50+1500. 25Y- 1000i+250G
93D550-1000
b. Derive the LM relation. (Hint: Write this equation with i on the left side and everything
else on the right.)
Transcribed Image Text:4. Consider the following IS-LM model: Consumption:C = 200 + .25YD Investment : I = 150 + .25Y -1000i Taxes : T = 200 Government Expenditures : G = 250 Demand for Real Money Balances : (M/P)d = 2Y -8000i Money Supply : M/P = 1600 a. Derive the IS relation. (Hint: You want an equation with Y on the left side and everything else on the right.) 9-C-1+G Y= 200 0.25 (Y-200) + 150 0.25 4-1000(1) +250+ Y- 200 0.254-50+1500. 25Y- 1000i+250G 93D550-1000 b. Derive the LM relation. (Hint: Write this equation with i on the left side and everything else on the right.)
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