C = 0.8(1 − t)Y I = 900 50i G = 2,000 M t = 0.25 L = 0.5Y 125i 1,500 P Task 1. Derive the equations for the IS and LM curves. Tasks 2. Solve for the equilibrium income and equilibrium interest rate Tasks 3. Solve for the investment demand and money demand in equilibrium Task 4. Solve for the equilibrium income and interest rate when government spending decreases to 1,500.

C = 0.8(1 − t)Y I = 900 50i G = 2,000 M t = 0.25 L = 0.5Y 125i 1,500 P Task 1. Derive the equations for the IS and LM curves. Tasks 2. Solve for the equilibrium income and equilibrium interest rate Tasks 3. Solve for the investment demand and money demand in equilibrium Task 4. Solve for the equilibrium income and interest rate when government spending decreases to 1,500.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section9.A: The Simple Algebra Of Income Determination And The Multiplier

Problem 4TY

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