C = 1275 + 0.5(Y-T) â 200r
I = 900 â 200r
Real Money demand, L = 0.5Y â 200i
Expected inflation, ? = 0
Full employment output, = 4600
a.) Suppose that T = G = 450 and M = 9000
Find an equation describing the IS curve
Find an equation describing the LM curve
Find an equation for the aggregate demand curve (Hint: Use IS and LM equations to find a relationship between Y and P)
What are the general equilibrium values of output, consumption, investment, real interest rate, and price level?
b) Suppose M = 4500, T and G remain the same.
What is the equation for the aggregate demand curve?
What are the general equilibrium values of output, consumption, investment, real interest rate, and price level?
c.) Suppose T = G = 330 and M = 9000
What is the equation for the aggregate demand curve?
What are the general equilibrium values of output, consumption, investment, real interest rate, and price level?