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Explain the effects of increase in value of dollar

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A. Using the IS-LM, graph and explain what happens if w increase government spending and decrease the money supply.  Make sure to include the Money graph and the Keynesian Cross.

B. Using the IS-LM, graph and explain the effects of an increase in the value of the dollar.

C. Using the IS-LM, graph and explain the effect of a decrease in government spending of $700 trillion dollar and a MPC of .80.

D. Assume the economy is represented by the following equations

Money demand = 6y-120r

Money supply = 5400

Y = C + I + G

C = 180 + .7 (Y-T)

T = 400

I = 100 - 18r + .1 Y

G = 400

A. Solve for equilibrium in the goods market (in terms of income).

B. Solve for equilibrium in the financial market (in terms of interest rates).

C. Solve for the equilibrium interest rate.

D. At this equilibrium what is the level of consumption and investment.

E. What happens if G increase by 10 to become 410? How does this impact Investment

Reference no: EM132443630

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