Let the IS equation be given asAgY1-b1-bwhere 1-b is the marginal propensity to save, g is the investment sensitivity to the interestrate i, and A is an aggregate of exogenous variables.Let the LM equation beMoY = +-i,k kwhere k and I are income and interest sensitivity of money demand, respectively and Mo is isthe real money balances.Ifb=0.7,g=100, A = 252, k = 0.25,1=200, and Mo = 176,then the IS-LM equations areandSolve for Y and i.1000Yi=840,3Y-800i = 704.

The IS equation is given as The LM equation is given asIt is also givenThe IS-LM eqautions are

Let the IS equation be given as A g -i, -b 1-b where 1-b is the marginal propensity to save, g is the investment sensitivity to the interest rate i, and A is an aggregate of exogenous variables. Let the LM equation be Y = Mo 1 k +-i, where k and I are income and interest sensitivity of money demand, respectively and Mo is is the real money balances. If b=0.7,g=100,A= 252, k = 0.25,1=200, and Mo = 176, 1000 then the IS-LM equations are Y+ i=840, 3 and Solve for Y and i. Y-800i = 704.

Let the IS equation be given as A g -i, -b 1-b where 1-b is the marginal propensity to save, g is the investment sensitivity to the interest rate i, and A is an aggregate of exogenous variables. Let the LM equation be Y = Mo 1 k +-i, where k and I are income and interest sensitivity of money demand, respectively and Mo is is the real money balances. If b=0.7,g=100,A= 252, k = 0.25,1=200, and Mo = 176, 1000 then the IS-LM equations are Y+ i=840, 3 and Solve for Y and i. Y-800i = 704.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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