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I have attempted part a and b, could you please check over them and show all working for part c. Thank you in advance! Question
I have attempted part a and b, could you please check over them and show all working for part c. Thank you in advance!
Question 1 Exhibit A C=100+c Y D Exhibit B I =I b i Exhibit C M /P=800 Y D =Y tY + TR I =300 L=620+ k Y h i c=0.8 b=20 k =0.2 h=20 t=0.2 5 I =200 G=300 TR=100 =0 NX BS=tY G TR Y =2000 Let us now suppose we have an economy characterized as in Exhibit A. However, we make two changes. First, suppose that investment expenditure is now described by the equations in Exhibit B. Second, let us introduce a money market which is described by the equations in Exhibit C. (a) Derive the equation for the IS curve and the equation for the LM curve. 1950-50i 900+100i (b) Using the IS and LM curves from the previous question derive the equilibrium interest rate and income. (7,1600) (c) In Exhibit A consumption spending is not driven by the interest rate. Suppose now that consumption is determined by the following equation: c Y Dai C=C+ with a>0 . Derive an algebraic expression for the IS curve given this and comment on the slope of this curve compared with the case where Please show all working a=0Step by Step Solution
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