1 Derive the IS curve given the following MACRO aggregates in an economy:

Graph the IS curve.

Consumption C =10 + 0.5Y

Investment I=190-20i

Y, Level of Income Y = C + I

2 The following equations describe an economy:

Consumption C =100+0.75Yd Yd=(Y - T+ Tr)

Investment I = 50 -25i

Taxes T = 50

Transfers Tr = 0

Govt Expenditures G = 50

Derive the IS curve.Use Y = C + I + G.

3 Derive the LM curve.

Graph the LM curve.

Money Demand Md=0.4Y-80i

Money Supply Ms=1200

Solve for i, the interest rate.

Solve for Y,income level.

IfY = 4000, what is i?

IfY = 4400, what is i?