Values of income and intrest rate, Basic Statistics

Now imagine that consumption is given as:

            C = 400 + 0.9YD - 1,750i

And as above:

      Y = PE = C + I + G + NX                           (Income identity)

      I = 200 - 1,800i                                        (Investment)

NX = 200 - 0.1Y - 200i                                     (Net exports)

MD = (0.8Y - 3,000i)                                     (Money demand)

And that as before government spending G = $200, the tax rate t = 0.3333, and the money supply MS = $1,104 (and assume the price level is constant at P = 1).

a.  Under these assumptions, what is the IS curve?

b.  What are the values of income (Y) and the interest rate (i) when the IS-LM model is in equilibrium?

c.  How does this new IS curve compare to your original IS curve from problem #4?  That is, is your new IS curve flatter or steeper?  Given your answer, would you suspect that monetary policy would be more (or less) effective in the current model versus the original model?  Briefly explain.

Posted Date: 2/21/2013 8:12:46 AM | Location : United States







Related Discussions:- Values of income and intrest rate, Assignment Help, Ask Question on Values of income and intrest rate, Get Answer, Expert's Help, Values of income and intrest rate Discussions

Write discussion on Values of income and intrest rate
Your posts are moderated
Related Questions


Defination,Advantages and Limitation, Proper Management of company,

For the month of June, Department A of Pauley Inc. had a segment margin ratio of 15%, a variable expense ratio of 60% of sales, and traceable fixed expenses of $15,000. Department

Assumed Means Deviations in F2 Test : When actual means of X and Y variables are in fractions the calculations can be simplified by taking the deviations from assumed means. When d

CASE STUDY 1 3 MARKS An audit of the accounting records of Loch Ness Ltd. for the year ending 30 June 2012 discovered that the ending inventory balance


(Penney’s game) Independent flips of a biased coin that lands on heads with probability 0.7 are made. Each of two players, A and B, had chosen one out of the eight triplet: {HHH, H

A pharmaceutical company is a monopoly in Alzheimer's disease drugs and faces the following inverse demand curve: , where α is the level of advertising. Its marginal production