Question

Suppose that the following equations describe an economy. Y = Cd + Id + G Cd...

Suppose that the following equations describe an economy.

Y = Cd + Id + G

Cd = 180 + 0.8(Y – T)

Id = 140 – 8r + 0.1Y

T = 400

G = 400

(Md/P) = 6Y – 120i MS = 6000 i = πe + r

Assume expected inflation πe = 0 and price level P = 1.

  1. Find the equation for the IS curve.
  2. Find the equation for the LM curve.
  3. Find the equilibrium values for output and the interest rate.
  4. At this equilibrium, what is the level of consumption and investment?
Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Given an economy described by the following set of equations. Y = C(Y - T) +...
Given an economy described by the following set of equations. Y = C(Y - T) + I(r) + G C = 200 + 0.80(Y - T) I = 300 - 2r G = 400 T = 200 (M/P)d = 0.80Y - 8r Ms = 5,600 Price-level = P = 2 What is the equilibrium level of consumption?
Given an economy described by the following set of equations. Y = C(Y - T) +...
Given an economy described by the following set of equations. Y = C(Y - T) + I(r) + G C = 200 + 0.80(Y - T) I = 300 - 2r G = 400 T = 200 (M/P)d = 0.80Y - 8r Ms = 5,600 Price-level = P = 2 What is the equilibrium level of consumption?
Given an economy described by the following set of equations. Y = C(Y - T) +...
Given an economy described by the following set of equations. Y = C(Y - T) + I(r) + G C = 200 + 0.80(Y - T) I = 300 - 2r G = 400 T = 200 (M/P)d = 0.80Y - 8r Ms = 5,600 Price-level = P = 2 What is the equilibrium level of GDP?
Given an economy described by the following set of equations. Y = C(Y - T) +...
Given an economy described by the following set of equations. Y = C(Y - T) + I(r) + G C = 200 + 0.80(Y - T) I = 300 - 2r G = 400 T = 200 (M/P)d = 0.80Y - 8r Ms = 5,600 Price-level = P = 2 What is the equilibrium level of investment?
1. You are given the following equations for the real and monetary sectors of a specific...
1. You are given the following equations for the real and monetary sectors of a specific economy; Real Sector Equations: C = 10,000 + 0.8 (Y – T); I = 20,000 – 6000 r; G = 29,000; T = 5,000 + 0.1 Y X = 10,000; M = 5,000 + 0.1 Y. Monetary Sector Equations: Ms = 75,000; Md = 0.5 Y – 7,000 r; Yp = 200,000. Here, C = Consumption; Y = GDP = Income; T = Taxes;...
Assume the following equations for the goods and money market of an economy: C = 250...
Assume the following equations for the goods and money market of an economy: C = 250 + .8(Y-T) I = 100 - 50r T = G = 100. Ms = 200 Md = 0.2Y – 100r a) Derive the LM curve from the Md and Ms equations given above. Is this upward or downward sloping? The LM curve is written as Y = __ +/-__r. b) Using the equation of the original IS curve and the LM curve in part...
The production function in an economy is Y = 2(7N-0.02N2) With this production function, the marginal...
The production function in an economy is Y = 2(7N-0.02N2) With this production function, the marginal product of labor is .mpn = 14 - .08N. Labor Supply is , N8 = 88+2w, Desired consumption is , Cd=100+0.8Y -5020r -.5G, Desired investment is Id=100-500r Real money demand is Md/P = Y-2000 (r+?e) Other variables are expected inflation ?e=.05 , government purchases G = 200, and money supply is M = 2100 1. Find the general equilibrium values of the real wage,...
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...
Suppose the economy is described by the following equations: ​C = 350 + .7(Y – T)...
Suppose the economy is described by the following equations: ​C = 350 + .7(Y – T) ​I = 100 + .1Y - 1000i ​G = 500; T = 500 Money Supply (M/P)s = 3200 ​Money Demand (M/P)d = 2Y – 4000i a.​Write an equation for the IS relation. b.​Write an equation for the LM relation. c.​Find the equilibrium levels of Y and i. d.​Write the Aggregate Demand equation for this economy with Y as a function of P. e. ​Suppose...
An economy is initially described by the following equations: C = 500 + 0.75(Y - T);...
An economy is initially described by the following equations: C = 500 + 0.75(Y - T); I = 1000 - 50r; M/P = Y - 200r; G = 1000; T = 1000; M = 6000; P = 2; where Y is income, C is consumption, I is investment, G is government spending, T is taxes, r is the real interest rate, M is the money supply, and P is the price level. a. Derive the IS equation and the LM...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT