Asume the following is-lm modele expenditure sectorsp c

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Reference no: EM13378953

Assume the Following IS-LM Model

E Expenditure sector

Sp = C + I + G + NX

C = 110 + (2/3)YD

YD = Y - TA + TR

TA = (1/4)Y + 20

TR = 80

I = 250 - 5i

G = 130

NX = -30

Money Sector

M = 500

P = 1

md = (1/2)Y + 400 - 20i

a) Calculate the equilibrium values of private domestic investment (I), tax revenues (TA), and real money demand (md).

2b) How much of private domestic investment (I) will be crowded out if government purchases are increased by DG = 100?

Reference no: EM13378953

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