Consider the following economy with: IS curve YIS = k (AP – 123 R); LM curve...

Consider the following economy with: IS curve YIS = k (AP – 123 R); LM curve YLM = 5 (M^s/P) + 499 R ; k = 3.95 ; AP = 5050 ; MS = 1980 . Derive the IS and the LM curves for P = 1.0. Find the interest rate and the output at equilibrium Find the equilibrium interest rates and outputs for the following price levels: 0.8; 1.2; 2.0. Plot the aggregate demand (AD curve) based on your findings in c.

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Rahul Sunny answered 1 year ago

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