The commodity and money markets for an economy are defined by the followingequations:Commodity MarketC = 640 + 0.8YdI = 80 – 80rG = 160T = 100Money MarketMa = 50 + 0.8Y – rM; = 80i)Derive the IS and LM curveii)Compute the equilibrium values of Y and r in this economy

Equilibrium in the economy is reached where IS curve intersects LM curve

The commodity and money markets for an economy are defined by the following equations: Commodity Market C = 640 + 0.8Yd 1 = 80 – 80r G = 160 T = 100 Money Market Ma = 50 + 0.8Y –r M, = 80 i) Derive the IS and LM curve ii) Compute the equilibrium values of Y and r in this economy

The commodity and money markets for an economy are defined by the following equations: Commodity Market C = 640 + 0.8Yd 1 = 80 – 80r G = 160 T = 100 Money Market Ma = 50 + 0.8Y –r M, = 80 i) Derive the IS and LM curve ii) Compute the equilibrium values of Y and r in this economy

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter10: Consumer Choice Theory

Section: Chapter Questions

Problem 10P

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