Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

b) In an Economy, the consumers are known to consume 40% of their disposable income, while if they earned no income, they would consume commodities

b) In an Economy, the consumers are known to consume 40% of their disposable income, while if they earned no income, they would consume commodities worth 50 million shillings. The government takes 50% of consumer's income in form of income tax while the other sources contribute 105 million shillings to government. The government spend 250 million shillings on its projects. The rest of the information concerning the economy is as follows: Page 1 of 2 I=125-0.2 r (Investment Function) M_("dTP ")=(1)/(2)Y (Transactions and precautionary demand for money) M_(ds)=100-(1)/(4)r (Specilative Demand for Money) M_(s)=255 (Money Supply) i) Identify the endogenous variables in the models of this economy ii) Drive the IS and LM equations for the economy describe iii) calculate the equilibrium variables of the endogenous variables

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Complete Guide To Operational Auditing

Authors: Harry R. Reider

1st Edition

0471594199, 978-0471594192

More Books

Students also viewed these Accounting questions

Question

suggest a range of work sample exercises and design them

Answered: 1 week ago