Answer to Question #257122 in Macroeconomics for Nat

Question

Determine the nature of function y=f(I) which equals demand for money with supply of money Ms=3950 Md=L1+ L2 L1=0.7y L2=1850-77i. Y=4210.35-100i

Answer 1

$M_d=L_1+L_2$

$M_d=0.7y+1850-77i$

$M_s=3950$

$Y=4210.35-100i$

$Y=M_d+M_s$

$Y=0.7y+1850-77i+3950$

$0.7y+5800-77i=4210.35-100i$

$0.7y=-1589.65-23i$

$y=\frac{-1589.65-23i}{0.7}$