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Build the is-lm function

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Reference no: EM133204729

Problem:

After reading all the available information carefully, answer the following questions:

Assume that we have the following data:

C=100+0.50Y

Ip=100-20r

Mt=0.10Y

Ms=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.

Cite references to material that you use.

  • Accurately described (graphically or verbally) the IS-LM functions. 
  • Accurately describe (graphically or verbally) the shift of the IS-LM function when Investments increase by 100 units. 
  • Describe each of the four areas defined by the IS-LM function. 
  • Use at least one example.

Reference no: EM133204729

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