Question
Assuming that the following are given: Sa =- 860; mps = 0.25; I = 780 + 0.2Y - 1500i; G = 450; Ta = 150;
Assuming that the following are given: Sa =- 860; mps = 0.25; I = 780 + 0.2Y - 1500i; G = 450; Ta = 150; M/Pd = 5Y - 5000i and M/Ps = 6,259.
a. Formulate the IS function
b. Formulate the LM function
c. Derive the equilibrium real output and the equilibrium real level of interest rate. Show the computations.
d. Prove that IS and LM are equal at the values derived in letter C. Show the computations.
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Managerial Economics
Authors: William F. Samuelson, Stephen G. Marks
8th edition
1118808940, 978-1119025900, 1119025907, 978-1119025924, 978-1118808948
