Answer to Question #37328 in Macroeconomics for Paul

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-100000i
ms=2600 (10 marks)
i. Derive the IS equation
Y = C + I + G
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
An open macroeconomic model is represented parametrically as follows

Answer 1

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