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with detailed solution typewritten ill rate later reference on comment section 1. (I Opts.) Let the IS equation be where I b is the marginal

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with detailed solution typewritten ill rate later reference on comment section

image text in transcribed

1. (I Opts.) Let the IS equation be where I b is the marginal propensity to save, g is the investment sensitivity to interest rates, and A is an aggregate of exogenous variables. Let the LM equation be where k and I are the income and interest sensitivity of money demand, respectively, and Mo is real money balances. Ifb - 0.7,g 100, A - 252, k - 0.25, 1 200, 176, then a. Write the IS-LM in matrix form. b. Solve for Y and i by matrix inversion. c. Solve for Yand i by Cramer's rule. Using the same IS-LM from (a), assume that b Mo 166. Then -06 g . , -90, A d. e. f. Write the IS-LM in matrix form. Solve for Y and i by matrix inversion. Solve for Y and i by Cramer's rule.

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