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Consider the following Model (notation is standard): C=c(Y-T) I=i(r) y = C+I+G Md/P = L(Y, r) Md= Ms=M y = f(n) n = h(W/P) f(n)
Consider the following Model (notation is standard):
C=c(Y-T) I=i(r) y = C+I+G Md/P = L(Y, r) Md= Ms=M
y = f(n) n = h(W/P) f(n) = W/P
Calculate the effects of a change in T on C, I, r, y and P. Illustrate your findings, graphically. And, interpret your results.
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