If the IS curve is given by Y=1,700–100r and the LM curve is given by Y=500+100r, then equilibrium income and interest rate are given by: Y=1100 , r=5% Y=1100, r=6% Y= 1000, r=5% Y=1200 , r=5%

The formula for the is curve can be derived from the formula Y = [CO+MPC(Y-T)]+1+G. When the IS curve is derived, I and G are assumed constant and Y varies based on the interest rate r. Assuming that CO=50B, MPC = 80, T=200B, I = 120B-10B (r), and G = 250B, the derived IS curve is (A),Y=1,300B - 50B (r) B ) Y=1, 400B +40B (r) C) Y=1, 300B +50B (r) D) Y=1, 400B - 50B (r) Using the IS formula you calculated in the problem above, what is the value of Y if r = 10(10%) ? A) 1,000B B) 900B C) 800B D) 700B Using the IS formula that you derived above, what is the value of Y ifr = 12 (12%) ? A) 1,000B B) 900B C) 800B D) 700B Assume that the ,M,d money demand function is (=Y-50r, where is the interest rate. The money supply M is 2,000B and the price level P is 4. Use this information to derive the LM curve function/formula. The LM function/formula is A ) Y=650B + 50B (r) B) Y = 650B +40B (r) C) Y = 500B-60B (r) D) Y = 500B + 50B (r) D) 50. ၁ The formula for the IS curve can be derived from the…

If you draw the cash flows from any investment, you would have negative cash flows at the beginning, and then you would receive a stream of positive cash flows thereafter. So why do we need the separate concept of a J-curve? In other words, what is the difference between a J-curve and the cash profile of any other investment?

For an economy where: C= 75 + 0.7Y |= 125 a) Solve for Y". Include your calculations. b) Draw the AE-Y graph for the economy. Include the intercept and slope of the AE function. c) On your graph from part (b), demonstrate the change that would occur if businesses increase their investment due to a change in interest rates.

Assume a model economy with the following parameters: C=300+0.25 Yd I=250+0.5Y-2500i G=350 T=300 (M/P)d= 4Y-16,000i (M/P)s= 880   Derive the IS and LM relations and solve for equilibrium real output and equilibrium interest rate.

When interest rates increase, we expect the supply curve for large durable goods to shift upwards. True False

Suppose the U.S. economy was at trend and now benefits from a boom in Asia, which raises de by 0.015. All other demand parameters remain unchanged. In order to maintain Y₁ = 0, the Federal Reserve raises the real interest rate R by 0.6 percentage point. Based on this information you know that b =

Consider a small macroeconomy located near the South Pacific Ocean where the current interest rate is 15 percent and the potential level of real GDP equal to $2.7 billion. Consumers spending behavior is described by the equation: C = 175 + 0.8DI, while firm's investment spending behavior is described by the equation: 1 = 60 +0.25Y-750r. Trade is allowed and currently, total exports is fixed at $150 million while total imports is described by the equation: IM = 320 + 0.1Y. The government's spending is fixed at $840 million and net taxes is described by the equation: T=50 +0.25Y. (Question 4 of 6) Consider that actual rate of unemployment is 5 percent and the current government implements a monetary policy to stabilize the current economic environment. Given the government's policy, what will be the new equilibrium level of GDP (in millions of dollars)? (report your answer at 2 decimal places)