Answer to Question #334126 in Macroeconomics for Preetha

Question

2. Given two equations of the IS curve for a 3 sector economy:

IS₁ where Y = 2000 - 5000r

IS₂ where Y = 3000 - 5000r

a. Draw the curves IS₁ and IS₂ in a diagram using r = 5% and 10%.

b. Describe how the following factors shift the IS curve to the left.

i. Tax at once

ii. Use of autonomus

c. i. Calculate the gradients of the curves IS₁ and IS₂.

ii. Are these two curves parallel?

Answer 1

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