Find the value of monetary policy multiplier with respect

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Reference no: EM13393046

Consider an IS/LM model of an economy with the following equations:

C = 300 + 0.6Yd

I = 100 - 5i

= 200

= 100

T = 0.2Y

L = 0.5Y - 30i

/ = 500

(a) Using the above data, derive the equation for the IS schedule.

(b) In this example, what is the equation for the LM schedule?

(c) Calculate the equilibrium level of income and interest rates. Sketch the IS/LM equilibrium position.

(d) What is the value of the monetary policy multiplier with respect to income and interest rates? If the money supply is increased by 100, what are the new market-clearing income and interest rate levels?

Reference no: EM13393046

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