Assume that an economy is characterized by the equations

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Reference no: EM131006088

Assume that an economy is characterized by the following equations: C = 100 + (2/3)(Y − T ) T = 600 G = 500

I = 800−(50/3)r Ms/P = Md/P = 0.5Y −50r

(a) Write the numerical IS curve for the economy, expressing Y as a numerical function of G,T, and r.

(b) Write the numerical LM curve for this economy, expressing r as a function of Y and M/P.

(c) Solve for the equilibrium values of Y and r, assuming P = 1.0 and M = 1, 200. How do they change when P = 2.0? Check by computing C, I, and G. d. Write the numerical aggregate demand curve for this economy, expressing Y as a function of G, T , and M/P .

Reference no: EM131006088

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