In: Economics
Given C= 102 + 0.75Yd,
I=150 – 100i, Ms =300, LT=0.25Y, and
LA = 124-200i
2.1 Find commodity market equilibrium i.e. IS curve
2.2. Find money market equilibrium i.e. LM curve
2.3. Find equilibrium income
2.4. Find equilibrium interest rate
Suppose money supply increases by $17,
2.5. Find the amount of new equilibrium income
2.6. Find the amount of new interest rate
Suppose autonomous investment drops down by $97
2.7. What is the amount of new equilibrium income?
2.8. Find the new interest rate
This information was given at the top if you need it.
Given the following information
C = Co + b(Y-T)
I =Io + Iy - IrR
G =Go
T =To
Md = Lo – LrR + LyY
Ms = Mo
Where C0 = Autonomous consumption
b= MPC,
Iy= income sensitivity of investment (Income elasticity of investment)
Ir= interest elasticity of investmen
Lr= interest elasticity of money demand
Ly= income elasticity of money demad
I= investment, G= Government spending, T = Taxes
R= interest rate
Y= GDP
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the solution of the above question is,