. Given: C = 700 + .80 (1- t)Y, t=0.25 I = 210 -75i; G= 1000; TR=100 L= 0.20Y- 40i ; M/P = 800 B. Compute: 1. The equilibrium income and the equilibrium interest rate 2. Show the graph of the IS -LM equilibrium 3. If G is increased to 1,500, what will be the new
A. Given: C = 700 + .80 (1- t)Y, t=0.25 I = 210 -75i; G= 1000;
TR=100
L= 0.20Y- 40i ; M/P = 800
B. Compute:
1. The equilibrium income and the equilibrium interest rate
2. Show the graph of the IS -LM equilibrium
3. If G is increased to 1,500, what will be the new level of equilibrium income
and interest rate? What happens to the IS curve?
4. If tax rates is increased to 0.35, what will be the new level of equilibrium
income and interest rate? What happens to the IS Curve?
5. If M/P is increased to 900, what will be the new level of equilibrium income
and interest rate? What happens to the LM curve?
6. Given the simulated values of equilibrium incomes and interest rates,
whatexplanation can you offer on such changes? On its impact in our economy?
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