Assume that an economy is characterized by the following equations: C = 250 + 0.75(Y - T); T = 100; G = 50 I = 200 - 25r Ms = 1000; P = 2; Md /P = Y - 100r a. Using the Keynesian cross model, find the equilibrium level of Y when r = 6 and graph the results. b. Calculate the IS and LM equations. Use the IS-LM model to find the equilibrium level of r and Y. Graph the results.
Assume that an economy is characterized by the following equations: C = 250 + 0.75(Y - T); T = 100; G = 50 I = 200 - 25r Ms = 1000; P = 2; Md /P = Y - 100r a. Using the Keynesian cross model, find the equilibrium level of Y when r = 6 and graph the results. b. Calculate the IS and LM equations. Use the IS-LM model to find the equilibrium level of r and Y. Graph the results.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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)Assume that an economy is characterized by the following equations:
C = 250 + 0.75(Y - T);
T = 100;
G = 50
I = 200 - 25r
Ms = 1000;
P = 2;
Md /P = Y - 100r
a. Using the Keynesian cross model, find the equilibrium level of Y when r = 6 and graph the results.
b. Calculate the IS and LM equations. Use the IS-LM model to find the equilibrium level of r and Y.
Graph the results.
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