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In: Economics

Given C= 102 + 0.75Yd, I=150 – 100i, Ms =300, LT=0.25Y, and LA = 124-200i...

Given C= 102 + 0.75Y^d,
I=150 – 100i, M^s =300, L_T=0.25Y, and L_A = 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

M^d = Lo – LrR + LyY

M^s = Mo

Where C₀ = Autonomous consumption

b= MPC,

I_y= income sensitivity of investment (Income elasticity of investment)

I_r= interest elasticity of investmen

L_r= interest elasticity of money demand

L_y= income elasticity of money demad

I= investment, G= Government spending, T = Taxes

R= interest rate

Y= GDP

Expert Solution

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Rahul Sunny answered 8 months ago

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