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5. Consider the following. b. l-200+.5Y-750r C. G 450 d· T-100 e. (M/P)d-4y-5000 f. (m/p)- 2000...
Just e) f) and g) if possible please Question 5: The IS-LM model Consider the following...
Just e) f) and g) if possible please
Question 5: The IS-LM model Consider the following IS-LM model: Consumption: C = 200 +0.25YD Investment: I=150 + 0.25Y - 10001 Government spending: G=250 Taxes: T=200 Money demand: L(i,Y)-2Y - 8000 Money supply: Ms /P=1600 (a) Derive the equation for the IS curve. (Hint: You want an equation with Y on the lefthand side and all else on the right) (b) Derive the equation for the LM curve. (Hint: It will be...
Consider the economy of Hicksonia a. The consumption function is given by C = 200 +...
Consider the economy of Hicksonia a. The consumption function is given by C = 200 + 0.6(Y- T). The investment function is I = 200 - 40r. Government purchases and taxes are both 100. For this economy, graph the IS curve for r changing from 0 to 8. b. The money demand function in Hicksonia is (M/P)d = Y - 100r The money supply M is 1000 and the price level P is 2. For this economy, graph the LM...
Consider the Mundel-Fleming small open economy model: Y=C(Y-T)+1(1) + G Y = F(K,L) (M/P) L(r+z® Y)...
Consider the Mundel-Fleming small open economy model: Y=C(Y-T)+1(1) + G Y = F(K,L) (M/P) L(r+z® Y) Goods Money C = 50+0.8(Y- T) M 3000 I = 200-20r r*=5 NX = 200-508 P = 3 G=T= 150 L(Y, r) Y - 30r 1- find the IS* equation (hint : y as a function of e) 2- find the LM* equation (hint, also relates y and maybe e) 3-draw the IS-LM curve I y 4- find the equilibrium interest rate (trick question!)...
Consider the economy of Wiknam. The consumption function is given by C = 250+ 0.6(Y-T). a....
Consider the economy of Wiknam. The consumption function is given by C = 250+ 0.6(Y-T). a. Government purchases and taxes are both 100. In the accompanying diagram, graph the IS curve for r ranging from 0 to 8 by dragging and dropping the end points to the correct locations b. The money supply M is 2,875 and the price level Pis 5. In the accompanying diagram, graph the LM curve for r ranging from 0 to 8 by dragging and...
Assume the Chilean economy can be described as follows: C=200+0.25Yd l=150+0.25Y-1000r G=250 T=200 (M/P)d= L(r, Y)...
Assume the Chilean economy can be described as follows: C=200+0.25Yd l=150+0.25Y-1000r G=250 T=200 (M/P)d= L(r, Y) = 2Y- 8000r Ms=1840 P=1 a) Derive the equation for the LM curve. ( 1 .5 mk) b) Determine the slope af the LM curve. (0.5 mark) c) Derive the equation for the IS curve (I.S mk) d) Determine the slope ofthe IS curve. (0.5 mk) c) Compute the quilibrium values of income (Y) and interest rate (R)? (2 marks) [) Calculate the value...
Consider the following IS-LM model: C= 300+ 0.5YD, I=200+0.3Y-2000i, G=500, T=300 (a) Derive the IS relation....
Consider the following IS-LM model: C= 300+ 0.5YD, I=200+0.3Y-2000i, G=500, T=300 (a) Derive the IS relation. (The relationship of Y and i). (b) The central bank sets an interest rate of 10 %. How is that decision represented in the equations? (LM relation) (c) What is the level of real money supply when the interest rate is 10 %? Use the expression: (M/P) = 1.5.Y − 4000.i (d) Solve for the equilibrium values of C and I. (e) Suppose that...
Consider the typical IS-LM set-up characterized by the following equations: IS : Y = C(Y -...
Consider the typical IS-LM set-up characterized by the following equations: IS : Y = C(Y - T) +I(Y, i) +G LM : M P = Y.L(i) Suppose the economy is in a short run equilibrium. The government decides to perform contractionary fiscal policy by increasing taxes. (a) (5 points) Draw the effect this policy will have in the IS-LM framework (1 graph, Method 3). Label all axes, curves, the new and the old equilibrium. (b) (5 points) Using your graph...
Consider the economy of Wiknam. The consumption function is given by f. With the initial values...
Consider the economy of Wiknam. The consumption function is given by f. With the initial values for monetary and fiscal policy, suppose that the price level falls from 5 to 3. What happens ? What are the new equilibrium interest rate and level of income? C = 250+ 0.6(Y-T). The investment function is The LM curve shifts to the by about 383.33. I = 100-20r. What are the new equilibrium interest rate and level of income? The money demand function...
1. Consider the following numerical example of the IS-LM model: C = 100 + 0.3YD I...
1. Consider the following numerical example of the IS-LM model: C = 100 + 0.3YD I = 150 + 0.2Y - 1000i T = 100 G = 200 i = .01 (M/P)s = 1200 (M/P)d = 2Y - 4000i a. Find the equation for aggregate demand (Y). b. Derive the IS relation. c. Derive the LM relation if the central bank sets an interest rate of 1%. d. Solve for the equilibrium values of output, interest rate, C and I....
please help me Consider the following numerical example of the IS-LM model: C = 100 +...
please help me Consider the following numerical example of the IS-LM model: C = 100 + 0.3YD I = 150 + 0.2Y - 1000i T = 100 G = 200 i = .01 (M/P)s = 1200 (M/P)d = 2Y - 4000i Find the equation for aggregate demand (Y). Derive the IS relation. Derive the LM relation if the central bank sets an interest rate of 1%. Solve for the equilibrium values of output, interest rate, C and I. Expansionary monetary...
Just e) f) and g) if possible please
Question 5: The IS-LM model Consider the following IS-LM model: Consumption: C = 200 +0.25YD Investment: I=150 + 0.25Y - 10001 Government spending: G=250 Taxes: T=200 Money demand: L(i,Y)-2Y - 8000 Money supply: Ms /P=1600 (a) Derive the equation for the IS curve. (Hint: You want an equation with Y on the lefthand side and all else on the right) (b) Derive the equation for the LM curve. (Hint: It will be...
Consider the Mundel-Fleming small open economy model: Y=C(Y-T)+1(1) + G Y = F(K,L) (M/P) L(r+z® Y) Goods Money C = 50+0.8(Y- T) M 3000 I = 200-20r r*=5 NX = 200-508 P = 3 G=T= 150 L(Y, r) Y - 30r 1- find the IS* equation (hint : y as a function of e) 2- find the LM* equation (hint, also relates y and maybe e) 3-draw the IS-LM curve I y 4- find the equilibrium interest rate (trick question!)...
Consider the economy of Wiknam. The consumption function is given by C = 250+ 0.6(Y-T). a. Government purchases and taxes are both 100. In the accompanying diagram, graph the IS curve for r ranging from 0 to 8 by dragging and dropping the end points to the correct locations b. The money supply M is 2,875 and the price level Pis 5. In the accompanying diagram, graph the LM curve for r ranging from 0 to 8 by dragging and...
Consider the typical IS-LM set-up characterized by the following equations: IS : Y = C(Y - T) +I(Y, i) +G LM : M P = Y.L(i) Suppose the economy is in a short run equilibrium. The government decides to perform contractionary fiscal policy by increasing taxes. (a) (5 points) Draw the effect this policy will have in the IS-LM framework (1 graph, Method 3). Label all axes, curves, the new and the old equilibrium. (b) (5 points) Using your graph...
Consider the economy of Wiknam. The consumption function is given by f. With the initial values for monetary and fiscal policy, suppose that the price level falls from 5 to 3. What happens ? What are the new equilibrium interest rate and level of income? C = 250+ 0.6(Y-T). The investment function is The LM curve shifts to the by about 383.33. I = 100-20r. What are the new equilibrium interest rate and level of income? The money demand function...
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