Assume that we have the following data:

C=100+0.50Y

I

p

=100-20r

M

t

=0.10Y

M

s

=100-10r

M=80

a. Build the IS-LM function.

b. If we assume an increase in Investments by 100 units, please calculate again the IS-LM

functions.

c. The intersection of IS-LM functions defines four areas. Please analyze the behavior of the

markets for goods and money for each area.