Analyze the behavior of the markets for goods and money

Reference no: EM131000153

Question:

After reading all the available information carefully, prepare a two page (double-spaced) essay and answer the following questions:

Assume that we have the following data:

C = 100+0.50Y

I_p = 100-20r

M_t= 0.10Y

M_s= 100-10r

M = 80

a. Build the IS-LM function.

b. If we assume an increase in Investments by 100 units, please calculate again the IS-LM functions.

c. The intersection of IS-LM functions defines four areas. Please analyze the behavior of the markets for goods and money for each area.

Reference no: EM131000153

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