Suppose that the following equations describe an economy. C = 170 + 0.60YD MS = 735;...

Suppose that the following equations describe an economy.

C = 170 + 0.60YD	MS = 735; P = 1	T = 200
I = 100 - 4i	Md = 0.75Y - 6i	G = 350

a) Write down the equilibrium condition for the goods market (IS curve) (2 points)
b) Write down the equilibrium condition for the Money market (LM curve) (2 points)
c) Find the equilibrium values of interest rate (i) and output (Y) (2 points)
d) Find the level of consumption and investment in the equilibrium (2 points)

Expert Solution

Rahul Sunny answered 2 years ago

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