IS-LM economic model from a previous economics course and complete the

following:

a) Use the model to demonstrate the 3-step procedure of constructing an economic

model; (6 Marks)

b) What are the ingredients of this model? (4 Marks)

c) Which variables in this model are endogenous and exogeneous, respectively?

Explain. (5 Marks)

d) Which variable(s) in this model is/are independent or dependent variable(s)?

Explain. (5 Marks)

e) What are the advantages and disadvantages of this model according to your

understanding? (5 Marks)