C(YT) = 8000+ 0.25(Y - T) 2000 - 50r I(r) T = 1000 G = 250 L(r,Y) = .5Y - 50r M = 8,000 P = 4 Consumption Function Investment Function Taxes Government Spending Demand for Real Money Balances Money Supply Price Level answer questions (a)-(c). (a) Given the information above, drive an equation for the IS curve for the economy. Express the IS curve as r(Y). (b) Given the above equations, drive an equation for the LM curve for the economy. Express the LM curve as r(Y). (c) Solve for the equilibrium interest rate and output using the IS curve derived in (a) and the LM curve derived in (b).

C(YT) = 8000+ 0.25(Y - T) 2000 - 50r I(r) T = 1000 G = 250 L(r,Y) = .5Y - 50r M = 8,000 P = 4 Consumption Function Investment Function Taxes Government Spending Demand for Real Money Balances Money Supply Price Level answer questions (a)-(c). (a) Given the information above, drive an equation for the IS curve for the economy. Express the IS curve as r(Y). (b) Given the above equations, drive an equation for the LM curve for the economy. Express the LM curve as r(Y). (c) Solve for the equilibrium interest rate and output using the IS curve derived in (a) and the LM curve derived in (b).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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