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IS-LM Model (A). Suppose the economy doesn't have money market and I, G, T is provided. Let it take C = C 0+C 1 (Y-T).
IS-LM Model (A). Suppose the economy doesn't have money market and I, G, T is provided. Let it take C = C 0+C 1 (Y-T). Derive an performance of equilibrium and multiplier of government expenditure. (B). Suppose investment is now I=b_0+b_1 Y-b_2 i.. Assume the interest rate is set exogenously. Derive a performance of equilibrium and multiplier of government expenditure. What does this measure of expenses relate to those found in section a)? c). Introduce a money market MP = d1Y-d2i in which. Production come from equilibrium. Derive a multiplier for the budget. Was it bigger or smaller than that which you measured in section b)? Provide any insight about the result
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