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For the IS-LM model C = co + q( Y -T) T =ty G = go + 91Y I = bo - bji+ b2Y M
For the IS-LM model C = co + q( Y -T) T =ty G = go + 91Y I = bo - bji+ b2Y M p = dy - dzi a Using the graph of the Goods Market, derive the IS curve. You do not need to derive the IS relation at this point. Explain (2 pts) b Find the equilibrium output (1 pt). c Suppose the government increases go. . Which conditions must the parameters satisfy so that the fiscal deficit increases? Just write down the equation(s) you would need to solve to find those conditions. (1 pt) . Which conditions must be met so that there is a crowding-out effect? Just write down the equation(s) you would need to solve to find those conditions. (2 pts)
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