Question
Assume that the consumption function is given by C = 200 + 0.5( Y - T ) and the investment function is I = 1,000
Assume that the consumption function is given byC= 200 + 0.5(Y-T) and the investment function isI= 1,000 - 200r, whereris measured in percent,Gequals 300, andTequals 200.
(a) What is the numerical formula for theIScurve? Write theIScurve in two ways, expressingYas a function ofrandras a function ofY.
(b) What is the slope of theIScurve?
(c) Ifris one percent, what isI? What isY? Ifris 3 percent, what isI? What isY?
(d) IfGincreases, does theIScurve shift? If yes, explain the direction of the shift.
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Bank Management
Authors: Timothy W Koch, Mark S Cracolice
7th Edition
1111804265, 9781111804268
