Question

Consider the following economy with: Real Money demand 〖 (M/P)〗^d = – 12 R + 0.38 Y Real Money supply (M^s/P)= 4510 Derive the LM curve Derive the LM curve when the money supply increases by 680. Derive the LM curve when money supply decreases by 12% Compare the LM curves from a, b and c by graphing them using any graphing tool (excel preferably). Comment on the differences. Find the value of money demanded when income Y = 15,000 and interest rate R = 5. Is this equilibrium? Why? Why not? Consider the following economy with: Real Money demand 〖 (M/P)〗^d = – 12 R + 0.38 Y Real Money supply (M^s/P)= 4510 Derive the LM curve Derive the LM curve when the money supply increases by 680. Derive the LM curve when money supply decreases by 12% Compare the LM curves from a, b and c by graphing them using any graphing tool (excel preferably). Comment on the differences. Find the value of money demanded when income Y = 15,000 and interest rate R = 5. Is this equilibrium? Why? Why not?

Answer 1

-12R 038y a P 4510 -12R0.33 y 4516. 12R 12 R 4510 + 38 Y= 60 4510 +12 R Abl 9510 t12R Cs Scanned with Camscanner

4510 +680 5-19.0 TM- LM P 122 t 0.28Y 5290 5190 12R -33y 30 22R 1-6D 590 22R 50 es Scannewitbuaue CamScanner 12 50 (5190 19

ouan m -4510 T y = 5 0 14 510t12R) LM MS P 5190 12R) LM2 512이 50 9 12 R) 39 688 whan 5으 LMz 19. MS - 3968-8 LM3 LM LIM 2 CS Scanned woh 10444.2 CamScanner 13657 89 1868.42

-12R+ 0.38Y P 15 o00 R 5 0 38 x 15000 P 5 00 56yo 4510 Equilibrium hut at Y= 15660 equiibnium t is not CS Scanned with CamScanner