Question
Y = C[(1-t)Y] + I[ i, Y ] + G a) Derive its slope. b) Assuming...
Y = C[(1-t)Y] + I[ i, Y ] + G a) Derive its slope. b) Assuming that the IS is upward sloping, show how a change in G shifts the IS line, assuming dY=0 (a vertical slice). Draw a diagram to illustrate your result. c) Assuming that the IS is upward sloping, show how a change in G shifts the IS line, assuming di=0 (a horizontal slice). Draw a diagram to illustrate your result.
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