The IS-LM model for a closed economy is given below, where Y is the output,C is the consumption, I is the investment, T is the income tax, Md is themoney demand, P is the price level, r is the real interest rate, n is expectedinflation rate and G is the government expenditure.C = 200 + 0.8 (Y – T) – 500 r1 = 200- 500 r%3DT = 20 +0.25 Y%3DMa= 0.5 Y- 250 (r+n°)If G= 196, n° 0.1, the nominal money supply equals 9890 and the full%3Demployment output equals 1000, the full employment equilibrium price level in(in integer)the economy is

The equilibrium price is the market price where the quantity of goods supplied is equal to the…

T = 20 + 0.25 Y Md = 0.5 Y- 250 (r+n°) P If G 196, = 0,1 , the nominal money supply equals 9890 and the full %3D employment output equals 1000, the full employment equilibrium price level in (in integer) the economy is

T = 20 + 0.25 Y Md = 0.5 Y- 250 (r+n°) P If G 196, = 0,1 , the nominal money supply equals 9890 and the full %3D employment output equals 1000, the full employment equilibrium price level in (in integer) the economy is

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The IS-LM model for a closed economy is given below, where Y is the output,
C is the consumption, I is the investment, T is the income tax, Md is the
money demand, P is the price level, r is the real interest rate, n is expected
inflation rate and G is the government expenditure.
C = 200 + 0.8 (Y – T) – 500 r
1 = 200- 500 r
%3D
T = 20 +0.25 Y
%3D
Ma
= 0.5 Y- 250 (r+n°)
If G= 196, n° 0.1, the nominal money supply equals 9890 and the full
%3D
employment output equals 1000, the full employment equilibrium price level in
(in integer)
the economy is

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