How real gdp depends on the current interest rate

Reference no: EM13184714

You are given the following two IS curves that show how real GDP (Yt) in the current time period t depends on the current interest rate and interest rates in previous periods, where rt is the interst rte in time period t. Furthermore each time period corresponds to a quarter or three months.

II. $Y_{t}=8,400-5r_{t}-5r_{t-1}-5r_{t-2}-5r_{t-3}-5r_{t-4}-10r_{t-5}-15r_{t-6}-15r_{t-7}-15r_{t-8}-20r_{t-9}$

I. $Y_{t}= 8,800-25r_{t}-25r_{t-1}-25r_{t-2}-25r_{t-3}-25r_{t-4}-25r_{t-5}-25r_{t-6}-25r_{t-7}-25r_{t-8}-25r_{t-9}$

Reference no: EM13184714

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