You are given the following equations: r=4-Y r=1-25+/Y 2P IS curve LM curve a) Is this information sufficient to calculate output and interest rate values in the short run IS-LM equilibrium? If not, what other information do you need to do that? Please explain graphically why that extra information enables you to calculate equilibrium output and interest rate. b) Write the AD equation corresponding to the two IS and LM equations above. The following information is now added: Y = Y + 4(P - Pe); where Y = 4; Pe = 2 SRAS curve

You are given the following equations: r=4-Y r=1-25+/Y 2P IS curve LM curve a) Is this information sufficient to calculate output and interest rate values in the short run IS-LM equilibrium? If not, what other information do you need to do that? Please explain graphically why that extra information enables you to calculate equilibrium output and interest rate. b) Write the AD equation corresponding to the two IS and LM equations above. The following information is now added: Y = Y + 4(P - Pe); where Y = 4; Pe = 2 SRAS curve

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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