Consideraneconomycharacterisedby: C=500+0.8(Y−T) I=400−120r+0.1Y G=300 T=0.25Y L(r,Y)=Y−300r M/P=600 whereC,Y,I,G,T,r,LandM/P,denoteconsumption,output,investment, governmentspending,taxes,theinterestrate,liquiditypreferencesandthereal moneysupply,respectively. •DeriveexpressionsfortheISandtheLMschedulesandplotthetwocurves. •Findtheequilibriuminterestrateandtheequilibriumlevelofincome. •DerivetheKeynesianmultiplierandcommentitspropertiescomparedtothe standardcase. •CalculateandinterprettheeffectsonYandrofanincreaseofmoneysupply thatbringM/Pto1200

Consideraneconomycharacterisedby: C=500+0.8(Y−T) I=400−120r+0.1Y G=300 T=0.25Y L(r,Y)=Y−300r M/P=600 whereC,Y,I,G,T,r,LandM/P,denoteconsumption,output,investment, governmentspending,taxes,theinterestrate,liquiditypreferencesandthereal moneysupply,respectively. •DeriveexpressionsfortheISandtheLMschedulesandplotthetwocurves. •Findtheequilibriuminterestrateandtheequilibriumlevelofincome. •DerivetheKeynesianmultiplierandcommentitspropertiescomparedtothe standardcase. •CalculateandinterprettheeffectsonYandrofanincreaseofmoneysupply thatbringM/Pto1200

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter17: Capital And Time

Section: Chapter Questions

Problem 17.5P

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