Suppose that all the functions in the IS-LM are linear, for example, C(y, T) = C0 +

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Suppose that all the functions in the IS-LM are linear, for example,
C(y, T) = C0 + Cy (y - T)
I(r) = I0 + Irr
L(Y, r) = L0 + Lrr + Lyy
Solve for r and y in terms of the parameters G, T, M and C0, I0, L0, Cy, Ir, Lr, Ly.

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Foundations of Mathematical Economics

ISBN: 978-0262531924

1st edition

Authors: Michael Carter

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Question Posted: May 02, 2016 11:52 AM

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Suppose that all the functions in the IS-LM are linear, for example, C(y, T) = C0 +

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Substituting the linear functions in 435 and 435 the ISLM mo...View the full answer

Foundations of Mathematical Economics

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