Closed economy:

for IS curve: Ye = Co+Io+Go-cTo/ i-c(1-t) -w/1-c(1-t) * R

The IS-LM model is considered. Autonomous consumption equals 100, autonomous investment equals 200. government spending equals 100, autonomous taxes equal 100. marginal propensity to consume equals 0.9, investment sensitivity parameter equals 10, autonomous speculative demand equals 100, speculative demand sensitivity parameter equals 25, transactions demand sensitivity parameter equals 0.5, precautionary demand equals 200, nominal money supply equals 1000 and general level of prices equals 2. Using these values solve following problems: a) Find IS curve and interpret its slope b) Derive IS curve graphically c) Find LM curve and interpret its slope d) Derive LM curve graphically e) Present IS-LM model graphically and mark equilibrium point f) Find equilibrium income and equilibrium interest rate