Question
Assuming that the following aregiven: Ca = 525; mps = 0.4; I = 430 + 0.3Y - 2000i; G = 300; Ta = 200; M/Pd
Assuming that the following aregiven: Ca = 525; mps = 0.4; I = 430 + 0.3Y - 2000i; G = 300; Ta = 200; M/Pd = 4Y - 4000i and M/Ps = 2,500
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 the letter c. Show the computations.
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Auditing and Assurance Services
Authors: Timothy Louwers, Robert Ramsay, David Sinason, Jerry Straws
6th edition
978-1259197109, 77632281, 77862341, 1259197107, 9780077632281, 978-0077862343
