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
Imagine you are faced with the opportunity to play two coin flips, in which you get to call heads or tails prior to the flip of a fair, two-sided coin.  (That is, heads and tails h

Explain the effects of the transactions on Accounting Equation under a Financial Accounting System. Ans. Under the Double Entry System each of the financial transaction bring the

Since you have answered the same below question on 2012, can you provide it to me as free of charge this time? if yes, please send it to me on: Question" Case 1: Decision Analysis

If there are 12 numbered balls in a basket (0-11), and you get 6 chances to pick a ball what are the odds to get two of the same number, 3 of the same number, 4, 5 and 6. I would

what is probebility? and how to solve the sums of this?

One way to use contiguous allocation of the disk and not suffer from holes is to compact the disk every time a file is removed. Since all files are contiguous, copying a file requi

'Statistics is the backbone of decision-making'. Comment.

explain all the nature of statistics

Suppose the entire cola industry produces only two colas viz., Pepsi and Coke.  Given that a person last purchased Pepsi, there is 90% that his next purchase will be Pepsi.  Given

A game that friends and I try to play to guess how long it takes a ball to fall to the bottom of a cone and how many revolutions around the cone it will take. I do not have a lot