Question
The model for the IS-LM model is given below. Y = C +1 + G C = C(Y - T, R) I= I(Y, R)
The model for the IS-LM model is given below. Y = C +1 + G C = C(Y - T, R) I= I(Y, R) T = T(Y) M/P = L(Y, R) A) Find the effect of the increase in government spending on income and interest rate. Find the effect of the increase in the real money supply on income and interest rate. Note: You should examine the question by taking the total derivatives of the equations and using comparative static analysis.is expected!
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International Economics Theory and Policy
Authors: Paul R. Krugman, Maurice Obstfeld, Marc Melitz
11th Edition
134519574, 9780134521046 , 978-0134519579
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