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Relevant set of equations to derive the is curve

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Reference no: EM132512201

The following equations describe a closed economy.

Y = C + I + G

C = 120 + 0.5 (Y- T)

I = 100 - 10r

G = 50

T= 40

(M/P)d = Y - 20r

M = 600

P = 2

a. From the above list, use the relevant set of equations to derive the IS curve. Graph the IS curve on an appropriately labeled graph.

b. From the above list, use the relevant set of equations to derive the LM curve. Graph the LM curve on the same graph you used in part (b).

c. What are the equilibrium level of income and the equilibrium interest rate? Show this on your graph.

Reference no: EM132512201

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