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Can someone please help from a to e? Real money demand: mu +H hr Real money supply: :0 Consumption: C0 + C(I' T] Government spending:
Can someone please help from a to e?
Real money demand: mu +H" hr Real money supply: :0 Consumption: C0 + C(I' T] Government spending: G Tax: T Investment demand: In .br a. Derive an expression for the IS curve for Gondor (with r on the left hand side of the equation). What is the slope of the IS curve? Is it positive or negative? Explain your anssver. b. Derive an expression for the LM curve for Gondor {with r on the left hand side of the equation). What is the slope of the LM curve? Is it positive or negative? Explain your anssver. c. Derive the govermnent spending multiplier using the IS-LM model. Is it positive or negative? Explain your answer. d. Derive the tax multiplier using the IS-LM model. Is it positive or negative? Explain your answer. e. Suppose that there is a balanced budget rule in place in the Kingdom such that so = all" (ie. any increase in spending must be accompanied by an increase in tax). Would Gondor's output change in response to an increase in government spending given this rule? If output changes in response to an increase in government spending= derive an explicit algebraic expression to show the magnitude and direction of that changeStep by Step Solution
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