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Calculate an equilibrium income (is) schedule/curve

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Reference no: EM13702519

 1.  Assume a two-sector economy where Y = C + I C = a + b Y I = f ( i  ......         with  a = $18 billion           b = 0.8 
and investment demand schedule/curve so that at i =   Investment = 8%   $60 billion 6%   $70 billion 4%   $80 billion 2%   $90 billion 
Instructions:  Calculate an equilibrium income (IS) schedule/curve.  For your answer simply indicate the equilibrium income associated with each different rate of interest. 
2.  Still assume a two-sector economy as above, but with S = -15 + .2 Y and investment demand schedule/curve such that  at I =   Investment=   7%   $90   6%   $110  5%   $130  4%   $150 Instructions:  same as #1 above      
3.  Now let's assume a three-sector economy Y = C + I + G C = a + b Yd   specifically, C = 20 + .8 Yd Yd = Y - Tx     Tx = 50 billion I = f ( i .........     G = 100 billion G = Go Tx = Txo 
and investment demand schedule/curve so that at I =   Investment = 8%   $60 billion 6%   $70 billion 4%   $80 billion 2%   $90 billion 
Instructions:  Same as #1 and #2 above

Reference no: EM13702519

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