Question

C = 500 + 0.75(Y-T)

P = 2
I = 100 - 50r
(M/P)^D = y - 200r
G = 1000
T = 1000
M = 6000
1. Derive IS-LM curve
2. Solve for equilibrium
3. Cut taxes by 20% & keep M constant
r=y
4. Engage in monet

Answer 1

P = 2

I = 100 - 50r

(M/P)^D = y - 200r

G = 1000

T = 1000

M = 6000