Answer to Question #36555 in Economics of Enterprise for KELVIN

Question

Consider the following IS/LM model for a closed economy

C=400+0.4yd ,I=200+0.3y-2000i, G=360,T=400 ,m/p=4y-100000ims=2600 (10 marks)

i. Derive the IS equation
ii Derive the LM equation
iii. Solve for equilibrium real output
iv. Solve for the equilibrium interest rate
v. Solve for equilibrium value of consumption and investment

Answer 1

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