Assume that an economy is characterized by the following equations: C= 100+ (2/3
ID: 1214356 • Letter: A
Question
Assume that an economy is characterized by the following equations: C= 100+ (2/3)^-7) T= 600 G=500 I= 800-(50/3)r r/P = M/P = 0.5 K- 50r a. Write the numerical IS curve for the economy, expressing Y as a numerical function of G, and r. b. Write the numerical LM curve for this economy, expressing rasa function of Y and MP. c. Solve for the equilibrium values of Yand r, assuming P= 1.0 and M = 1, 200. How do the^change when P = 2.0? Check by computing C, I, and G. d. Write the numerical aggregate demand curve for this economy, expressing Y as a function G, T, and M/P.Explanation / Answer
Ans:
the numerical IS curve for the economy , expressing Y as a numerical function of G, and r
a. Y = 2,700 + 3G - 2T - 50r.
The Numerical LM curve fro this economy , expressing r as a function of Y and M/P
b. r = 0.01Y - 0.02(M/P).
The equilibrium values of Y and r =
c. For P = 1.0, Y = 2,800
and r = 4;
C = 1,566.67
and I = 733.33.
For P = 2.0, Y = 2,400
and r = 12; C = 1,300
and I = 600.
The numerical aggregate demand curve for this economy , expressing Y as a function G,T and M/P
d. Y = 1,800 + 2G - (4/3)T + (2/3)M/P.