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Consider the following IS-LM model: c = 400 + 0.1% Go = 500 1 = 200 + O.IY To = 400 (M/P)d = 2Y
Consider the following IS-LM model: c = 400 + 0.1% Go = 500 1 = 200 + O.IY To = 400 (M/P)d = 2Y 5000i (M/P)o - 2000 (5 points) (a) Derive the equation for the IS curve and the equation for the L M curve. Y = 1325 2500i i = O.0004Y 0.4 (7 points) V = 1162.5 (b) Solve for equilibrium real output Y , investment I interest rate i , consumption C , and i' = 0.065 (or 6.5%) c = 476.25 r = 186.25
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Managerial Economics and Organizational Architecture
Authors: James Brickley, Jerold Zimmerman, Clifford W. Smith Jr
5th edition
73375829, 978-0073375823
