This is on the basics of the IS-LM model. The model is given by the following system of equations Y = C(Y; Y;r; A) + I(Ye;r; K) M/P = Y/V(i) where ri- and A denotes the wealth of the households. The rest of the notations are standard. What happens to the IS curve when the stock of capital increases? Select one or more: a. A movement along the IS curve b. IS shifts to the right c. Nothing d. IS shifts to the left

This is on the basics of the IS-LM model. The model is given by the following system of equations Y = C(Y; Y;r; A) + I(Ye;r; K) M/P = Y/V(i) where ri- and A denotes the wealth of the households. The rest of the notations are standard. What happens to the IS curve when the stock of capital increases? Select one or more: a. A movement along the IS curve b. IS shifts to the right c. Nothing d. IS shifts to the left

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider a macroeconomic model for an open economy with the government. Consumption is given by C = 250 + bYd, where b = 0.8, Yd = (1-t)Y, and t = 0.1. Investment is given by I = 1,200 – 2,000R, and net export is given by X = 525 – 0.1Y – 500R. Assume that G = 1,200. Money demand is given by (Md/P) = 0.1283Y – 1,000R. Assume that P = 1, and the fixed money supply is given by (Ms/P) = 900. Drive the expression for the IS curve from the model. Drive the expression for the LM curve from the model. Drive the IS-LM equilibrium from the model.
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PartA
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