Solve for the overall equilibrium

Assignment Help Macroeconomics

Reference no: EM1370279

Demand: Z=C+I+G
Consumption: C=Co+C1(Y-T)
Investment: I=aY-bi

1). Derive the IS-curve
Now assume that the interest rate is determined by: M/P=d1Y-d2i, where P is the price level, Y is real GDP and M/P is the real money stock.

2)Derive the LM curve

Suppose the value of the parameters of the model are: c1=0.5, a=0.3,b=1,Co=225,T=G=400,d1=1,d2=10.M=5 and P=1

3) solve for the overall equilibrium in the goods and money market. (solve for Y and i)

4) What is the multiplier, and what effect does it have?

Reference no: EM1370279

Questions Cloud

Find consumer present consumption : Let P = 53-Q be a consumer's long-run demand curve for gasoline, and P= 103-2Q be the consumer's short-run demand curve,

Explain if an investment does not fit with an organization''s : Explain If an investment does not fit with an organization's strategic plan and it is probably not a good idea, even if the net present value is positive.

Isoquant-isocost diagram : Employ an isoquant and isocost diagram and words to show how firms will respond to the decrease in the wage rate. Be sure to identify the short run scale effect and the long run substitution effect.

Create time algorithm-minimum time required to finish task : Create the O(|V | + | E |) time algorithm which, given times ti and the dependencies, determines minimum time required to complete all the tasks.

Solve for the overall equilibrium : Suppose that the interest rate is determined by; M/P=d1Y-d2i, where P is the price level, Y is real GDP and M/P is real money stock,

Explain management often disagrees with the use of seniority : Explain Management often disagrees with the use of seniority to determine promotion decision

Transfer pricing-optimal output equation : A firm sells specialized electronic computers. Each of the computers has a unique chip produced at a California plant at cost of Cw(Qc)=Q^2 c

Explain the use of alcohol and drug testing of job : Explain The use of alcohol and drug testing of job applicants and employees has become a complicated and critically important job security issue

Determining wage rate : Suppose XYZ can sell up to 40 units of output per hour at a price of $.60 per unit but cannot even get a penny for units produced in excess of 40 units per hour. How much output should XYZ produce each hour in order to maximize profits?

User Account

All Pages