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Assume you have the following model (use interest rates as a whole numbers): C = 200 + (0.8)Yº YO = Y - TA + TR TR = 60 | = 300 - 4.4i G = 100 Xnet = X - M = -120 TA = (0.3)Y Find the equation of the IS curve. What is the value of the multiplier here? Sketch your IS curve. a. b.

Assume you have the following model (use interest rates as a whole numbers): C = 200 + (0.8)Yº YO = Y - TA + TR TR = 60 | = 300 - 4.4i G = 100 Xnet = X - M = -120 TA = (0.3)Y Find the equation of the IS curve. What is the value of the multiplier here? Sketch your IS curve. a. b.

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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Assume you have the following model (use interest rates as a whole numbers): | = 300 - 4.4i 2. = 200 + (0.8)Y Y° = Y - TA + TR G 100 %3D Xnet = X- M = -120 TA = (0.3)Y TR = 60 Find the equation of the IS curve. What is the value of the multiplier here? Sketch your IS curve. Now suppose you are given the following information for the money market: (M/P) = L = .25Y - 5i and (M1/P) = $240. Find the equation of the LM curve. Sketch your LM curve on the same graph as your IS curve. Find the equilibrium interest rate and income for this economy. Now suppose government spending rises $132 (i.e., G now eqals $232). What is the new equation of the IS curve? Show what happens on your graph (just sketch it). Find the new equilibrium interest rate and income. а. b. С. d. е. f. g.
Transcribed Image Text:Assume you have the following model (use interest rates as a whole numbers): | = 300 - 4.4i 2. = 200 + (0.8)Y Y° = Y - TA + TR G 100 %3D Xnet = X- M = -120 TA = (0.3)Y TR = 60 Find the equation of the IS curve. What is the value of the multiplier here? Sketch your IS curve. Now suppose you are given the following information for the money market: (M/P) = L = .25Y - 5i and (M1/P) = $240. Find the equation of the LM curve. Sketch your LM curve on the same graph as your IS curve. Find the equilibrium interest rate and income for this economy. Now suppose government spending rises $132 (i.e., G now eqals $232). What is the new equation of the IS curve? Show what happens on your graph (just sketch it). Find the new equilibrium interest rate and income. а. b. С. d. е. f. g.
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