IS-LM, Macroeconomics

Assignment Help:
THE PRODUCT MARKET
Z=C+I+G
C=a+bYd
I=Io+I1Y-I2i
Equilibrium condition, Y=Z, where Y represents output and Z is aggregate spending.

THE FINANCIAL MARKET
Md=MT+Mp
MT=MTo+MT1Y
Mp=Mpo-Mp1i
Ms=500
a=100, b=0.7, Io=150, I1=0.1, I2=1500, Go=150, To=90, T1=0.08,
solve for:
i)Equilibrium real output Y and interest rate, r.
ii)Determine the amount of national saving.
iii)What is equilibrium value of consumption spending C, investment spending I, speculative money demand Mp.
iv)Is the economy operating below national level of output. If yes, then reduce money supply by 50% and reduce government spending 25%.
If no, then raise money supply by 50% and government spending by 25%.
Determine the equilibrium income.
How close is this new value to the national level of output.
Represent your answer in (i) and (iv) in a graph.





Related Discussions:- IS-LM

GDP, according to this example,how much value do each book contribute to th...

according to this example,how much value do each book contribute to the GDP? a) a forester chop down 100 trees and sell them @$100 to the paper and pulp factotry

Demand, Demand: Demand is quantity of a good buyer who wishes to purcha...

Demand: Demand is quantity of a good buyer who wishes to purchase at each conceivable price. The law of demand explains us that if the price of certain commodity increases,

Determine the inflation rate in germany between 1992-2010, Inflation in Ger...

Inflation in Germany Once we have monthly data on a price index we can calculate inflation. In most nations, the percentage change in price index during one month is small. So,

Index numbers of production, INDEX NUMBERS OF PRODUCTION  Among the com...

INDEX NUMBERS OF PRODUCTION  Among the commonly used economic indicators to monitor current trends in the economy are indices of production. The main aggregative indices used t

What is globalization, what are its effects on the Indian economy? Ans) ...

what are its effects on the Indian economy? Ans) It is largely positive. Globalization has brought a lot of jobs and large sums of investment to India. India's economy has been

Estimate the maximum possible daily profit, Shambles have selected the "Myt...

Shambles have selected the "Mythical Beasts" range and decided to concentrate on "Pegasus" and "Phoenix." They would now like to find the right mix of these two products in order

Explain the long-run phillips curve, Q. Explain the long-run Phillips curve...

Q. Explain the long-run Phillips curve? The long-run Phillips curve The augmented Phillips curve has an important consequence: the long-run Phillips curve must be vertical

Calculating a country''s balance of payments, Which of the following is con...

Which of the following is considered when calculating a country's balance of payments? Military expenditures state unemployment domestic inflation rates foreign inflation rates.

Solow model, Q1. The poorest countries in the world have a per capita incom...

Q1. The poorest countries in the world have a per capita income of about $600 today. We can reasonably assume that it is nearly impossible to live on an income below half this leve

Demand for money and gdp, Q. Demand for money and GDP? The demand for m...

Q. Demand for money and GDP? The demand for money also relies on the GDP as GDP is closely associated to national income. If you choose to hold a fixed proportion of your wealt

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd