Suppose the consumption and investment functions are as follows: C = 20 + 0.5Y I = 120

Question:

Suppose the consumption and investment functions are as follows:

C = 20 + 0.5Y I = 120 crore − 5r Find

(a) Th e equation of the IS curve and plot it.

(b) Th e equation of the IS curve when the investment function changes to I = 120 crore − 10r.

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