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What would be your monetary policy

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Reference no: EM133623942

Problem

Consider the following economy with C = 800 0.8(Y-T) I = 400 -100r G =600 T = 500 (M/P) = 500 0.5Y - 250r M = 3000 P = 2 a. Derive the IS and LM equations.

I. Find the equilibrium r and Y.
II. If = 3500, is the economy faced with recession or expansion?
III. If you were the chairman of the Federal Reserve, what would be your monetary policy? Why?

If you were an advisor to the President, what would you recommend as fiscal policy? How would this affect the federal budget?

Reference no: EM133623942

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