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Question: Assume an economy is described by the following economic parameters:
C = 0.8YD
YD = Y + TR - tY
TR = 100
t = 0.3
I = 1000 - 65i
G = 600
L = 0.25Y - 75i
M/P = 600
- What is the equation that describes the IS curve?
- What is the general definition of the IS curve?
- What is the equation that describes the LM curve?
- What is the general definition of the LM curve?
- What are the equilibrium levels of output and interest rates in this economy?
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