Find the equilibrium level of interest rate

Assignment Help Business Economics

Reference no: EM131391761

The IS and LM curves for the economy have the following equations :

IS : YIS = k (AP – 200 R )

LM: YLM = 5 (MS/P) + 500 R

Where the multiplier k= 2.5 ,

Autonomous Spending AP = 5200,

Money Supply MS = 1800

and Price P0 = 1.

Find the equilibrium level of interest rate

Find the equilibrium level of output

What will be the equilibrium output and interest rate for the prices of P1 = 1.2 and P2 = 2.0.

Please graph the relationship between the price level and the output y.

What variable does this relationship represent?

Reference no: EM131391761

Questions Cloud

How different assumptions about market structure : Assume that the Good Tire company needs outside legal help and that the expected marginal benefit of this help is given by MB=$200- 2-L, where L equals hours per week of legal services. discuss how different assumptions about market structure, inform..

Using the depreciation methods : A 100,000 asset has a 20,000 salvage value after its 10 year useful life. Calculate the book value at the end of year 2 using the following depreciation methods.

When is the outcome where both play leave nash equilibrium : Alice and Betsy are playing a game in which each can play either of two strategies, "leave" or "stay". If both play the strategy "leave", then each gets a payoff of $100. If both play the strategy "stay" then each gets a payoff of $200. If one plays ..

Affirmative action programs in colleges and universities : Which of the following is NOT true about affirmative action programs in colleges and universities?

Find the equilibrium level of interest rate : Find the equilibrium level of interest rate. Find the equilibrium level of output. What variable does this relationship represent?

Income for open economy and calculate trade balance : Calculate the multiplier if the economy is closed and the multiplier if the economy opens up. Explain the economic intuition why two are different with 3-5 sentences. Solve for the equilibrium level of income (Y) for the open economy (Yopen) and calc..

What is the natural rate of unemployment : What is the natural rate of unemployment? Why might θ increase in this way? What will the inflation rate be in years t+5, t+6, and t+7.

In competitive industry with constant costs : In a competitive industry with constant costs, the long- run response to a change in market demand is

Warehouse needs pest treatment : A warehouse needs pest treatment that requires opening all the windows and covering the building with a tent for 48 hours. Opening the windows means deactivating the alarm system. The warehouse owner is concerned about theft during this time. Assume ..

User Account

All Pages