define IS clorve

Woldia university College of Business and economics Department of Economics Individual assignment for macroeconomics Target group: summer Business education Weight :50% Final submission date: 27/09/2014 Instructions: state briefly and show all the necessary steps 1. Define what the IS curve mean? (5pt) 2. What is the effect of autonomous change in investment spending and government spending on the IS curve? (4pt) 3. Define what the LM curve mean? (5pt) 4. What is the effect of an increase in the money supply on the LM curve? (5pt) 5. Consider a two sector model where C=100+0.80Y and I=150-6r , M"=150 and the demand for money Md=0.20Y-4r, where M" is the supply of money a) Find an equation for equilibrium in the goods market (IS). (4pt) b) Find an equation for equilibrium in the money market (LM). (4pt) c) Find the income level and rate of interest at which there is simultaneous equilibrium in the money and commodity market. (6pt) 6. Consider an economy with the following functions C=100+0.80yd, 1=150-6r, T=0.25Y, G=100, Md=0.20Y-2r Mss=150, where T= tax Then find, a) the 15 equation. (4pt) b) the LM equation. (4pt) c) the simultaneous equilibrium income and interest rate. (4 pt) 7. Discuss the Mundell Fleming model at different exchange rates using graph. (5 point)