Question

4.Consider the following IS-LM model: C = 200+0.5 YD I = 150+0.25Y-1000i G=250 T=200 (M/P)d =...

4.Consider the following IS-LM model:
C = 200+0.5 YD
I = 150+0.25Y-1000i
G=250
T=200
(M/P)d = 2Y-8000i
M/P=1600
a. Derive the IS relation
b. Derive the LM relation
c. Solve for the equilibrium real output.
d. Solve for the equilibrium interest rate.

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Consider the following IS-LM model: C=400+0.25YD I=300+0.25Y-1500r G=600 T=400 (M/P)D=2Y-1200r (M/P)=3000 1-Derive the IS relation with...
Consider the following IS-LM model: C=400+0.25YD I=300+0.25Y-1500r G=600 T=400 (M/P)D=2Y-1200r (M/P)=3000 1-Derive the IS relation with Y on the left-hand side. 2-Derive the LM relation with r on the left-hand side. 3-Solve for equilibrium real output. 4-Solve for the equilibrium interest rate. 5-Solve for the equilibrium values of C, and I, and verify the value you obtained for Y adding C, I and G. 6-Now suppose that the money supply increases to M/P=4320. Solve for Y, r, C and I...
Consider the following numerical example of the IS-LM model: C = 100 + 0.3YD I =...
Consider the following numerical example of the IS-LM model: C = 100 + 0.3YD I = 150 + 0.2Y - 1000i T = 100 G = 200 i = 0.01 a) What is the equilibrium level out output (Y)? b) suppose the government increase spending to G=300. What is the new equilibrium level out output? c) G = 200. What is the equilibrium supply of money id the demand for money is given by (M/P)d = 2Y - 4000i?
Problem 2. Consider the following example of the IS-LM model: C = 340 + 0.5(Y–T) I...
Problem 2. Consider the following example of the IS-LM model: C = 340 + 0.5(Y–T) I = 400 – 1500(r + x) G = 150 T = 100 x=0.02 r = 0.04 ?e = 0.02 (1) Derive the IS equation. (2) Find the equilibrium value of Y. (3) Write down the zero lower bound constraint. Does the real interest rate of r=0.04 satisfy the constraint? (4) Suppose that the risk premium x has increased to x=0.09. (a) Derive the new...
IS-LM Model (Closed Economy) The following equations describe a small open economy. [Figures are in millions...
IS-LM Model (Closed Economy) The following equations describe a small open economy. [Figures are in millions of dollars; interest rate (i) is in percent]. Assume that the price level is fixed. Goods Market                                            Money Market C = 250 + 0.8YD                                      L = 0.25Y – 62.5i YD = Y + TR – T                                      Ms/P = 250 T = 100 + 0.25Y I = 300 – 50i G = 350; TR = 150 Goods market equilibrium condition: Y = C + I...
Assume the following IS-LM model: Y = C + I + G C = .8(1-t)Y t...
Assume the following IS-LM model: Y = C + I + G C = .8(1-t)Y t =0.25 I = 900 - 50i G = 800 Md = 0.25Y -62.5i Ms =500. (a)What will happen to the level of Y if G expands by 187.50? (b) What will happen to the composition of GDP? Explain and derive the numbers. (c). Was Investment crowded out? If so by how much.
Consider an economy that is described by the following equations: C^d= 300+0.75(Y-T)-300r T= 100+0.2Y I^d= 200-200r...
Consider an economy that is described by the following equations: C^d= 300+0.75(Y-T)-300r T= 100+0.2Y I^d= 200-200r L=0.5Y-500i Y=2500; G=600; M=133,200; Pi^e=0.05. (Pi being the actual greek pi letter sign). Please solve part D and E (a) obtain the equation of the IS curve (b) obtain the equation of the LM curve for a general price level, P (c) assume that the economy is initially in a long-run (or general) equilibrium (i.e. Y=Y). Solve for the real interest rate r, and...
In the Keynesian Model assume the following information: C=1000+0.5Yd I=300 G=200 T=100 here Yd=Y-T. Note that...
In the Keynesian Model assume the following information: C=1000+0.5Yd I=300 G=200 T=100 here Yd=Y-T. Note that I, G, T, represents private investment, Government spending and Taxes, respectively. What are: (i) the total injections and (ii) total leakages What is the equilibrium level of income, consumption, and saving and disposable income Assume that the level of output is 1200 how does the economy adjust to equilibrium, specifically mention inventory levels. Suppose private investment will decrease by 150, by how much the...
1. Consider an economy with the given equations. Y=C+I+GY=C+I+G C=112+0.6(Y−T)C=112+0.6(Y−T) I=120−10rI=120−10r (MP)d=Y−15r(MP)d=Y−15r G=$35G=$35 T=$45T=$45 M=$1200M=$1200 P=3.0...
1. Consider an economy with the given equations. Y=C+I+GY=C+I+G C=112+0.6(Y−T)C=112+0.6(Y−T) I=120−10rI=120−10r (MP)d=Y−15r(MP)d=Y−15r G=$35G=$35 T=$45T=$45 M=$1200M=$1200 P=3.0 a. Use the relevant set of equations to derive the IS curve and graph it. b. What is the equation for the IS curve? Y = c. Use the relevant set of equations to derive the LM curve. d. Calculate the equilibrium level of income (Y) and the equilibrium interest rate (r). Y= r (%)= e. Use the relevant set of equations to derive...
ECO308W Intermediate Macroeconomics Name: Dr. Schmidt Spring 2019 Quiz #4: IS-LM Equilibrium The US Macro economy...
ECO308W Intermediate Macroeconomics Name: Dr. Schmidt Spring 2019 Quiz #4: IS-LM Equilibrium The US Macro economy is represented by the following equations: Financial Sector: L = Md/P = 0.5Y – 50i Ms/P = 2000 Real Sector: AD = C+I+G   C = 600 + 0.8YD G = 800 I = 400 – 40i TA = 0.25Y TR = 250 YD = Y–TA+TR Set up the IS relationship (2 points) Step 1, convert C to a function of Y; step 2, set...
C= 0.8(1-t)Y,r=0.25,I=900-50r,G=900,L=0.25Y-62.5r and m/p=500 (money market equilibrium)r=interest rate a) what is the equation that describes the...
C= 0.8(1-t)Y,r=0.25,I=900-50r,G=900,L=0.25Y-62.5r and m/p=500 (money market equilibrium)r=interest rate a) what is the equation that describes the IS curve b) define IS curve c) define LM curve d) calculate equilibrium levels of income Y and interest rate r
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT