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Consider following static IS-LM model:
IS : Y = C(Yd) + I (r) + G
Consumption : C(Yd) = 100 + 0.75 Yd
Disposable income : Yd = Y – Tx
Investment : I (r) = 200 – 2 r
LM : M/P = L(Y, r)
Real money demand : L(Y, r) = 300 + 0.5 Y – 5 r
Money supply : Ms = M
Suppose P =1, M = 755, T = 100, G = 100. What is the equilibrium income ?Consider following static IS-LM model:
IS : Y = C(Yd) + I (r) + G
Consumption : C(Yd) = 100 + 0.75 Yd
Disposable income : Yd = Y – Tx
Investment : I (r) = 200 – 2 r
LM : M/P = L(Y, r)
Real money demand : L(Y, r) = 300 + 0.5 Y – 5 r
Money supply : Ms = M
Suppose P =1, M = 755, T = 100, G = 100. What is the equilibrium interest rateConsider following static IS-LM model:
IS : Y = C(Yd) + I (r) + G
Consumption : C(Yd) = 100 + 0.75 Yd
Disposable income : Yd = Y – Tx
Investment : I (r) = 200 – 2 r
LM : M/P = L(Y, r)
Real money demand : L(Y, r) = 300 + 0.5 Y – 5 r
Money supply : Ms = M
If P = 1 and M rises by 10 the LM curve moves byConsider following static IS-LM model:
IS : Y = C(Yd) + I (r) + G
Consumption : C(Yd) = 100 + 0.75 Yd
Disposable income : Yd = Y – Tx
Investment : I (r) = 200 – 2 r
LM : M/P = L(Y, r)
Real money demand : L(Y, r) = 300 + 0.5 Y – 5 r
Money supply : Ms = M
If M rises the LM curve movesConsider following static IS-LM model:
IS : Y = C(Yd) + I (r) + G
Consumption : C(Yd) = 100 + 0.75 Yd
Disposable income : Yd = Y – Tx
Investment : I (r) = 200 – 2 r
LM : M/P = L(Y, r)
Real money demand : L(Y, r) = 300 + 0.5 Y – 5 r
Money supply : Ms = M
Derive LM curve Y= f2(r; M, P). What is the slope of LM curveConsider following static IS-LM model:
IS : Y = C(Yd) + I (r) + G
Consumption : C(Yd) = 100 + 0.75 Yd
Disposable income : Yd = Y – Tx
Investment : I (r) = 200 – 2 r
LM : M/P = L(Y, r)
Real money demand : L(Y, r) = 300 + 0.5 Y – 5 r
Money supply : Ms = M
If T rises by 10 the IS curve moves byConsider following static IS-LM model:
IS : Y = C(Yd) + I (r) + G
Consumption : C(Yd) = 100 + 0.75 Yd
Disposable income : Yd = Y – Tx
Investment : I (r) = 200 – 2 r
LM : M/P = L(Y, r)
Real money demand : L(Y, r) = 300 + 0.5 Y – 5 r
Money supply : Ms = M
If G rise the IS curve moveConsider following static IS-LM model:
IS : Y = C(Yd) + I (r) + G
Consumption : C(Yd) = 100 + 0.75 Yd
Disposable income : Yd = Y – Tx
Investment : I (r) = 200 – 2 r
LM : M/P = L(Y, r)
Real money demand : L(Y, r) = 300 + 0.5 Y – 5 r
Money supply : Ms = M
If T increases by 5 the equilibrium income decreases byConsider following static IS-LM model:
IS : Y = C(Yd) + I (r) + G
Consumption : C(Yd) = 100 + 0.75 Yd
Disposable income : Yd = Y – Tx
Investment : I (r) = 200 – 2 r
LM : M/P = L(Y, r)
Real money demand : L(Y, r) = 300 + 0.5 Y – 5 r
Money supply : Ms = M
If T increases the equilibrium incomeConsider following static IS-LM model:
IS : Y = C(Yd) + I (r) + G
Consumption : C(Yd) = 100 + 0.75 Yd
Disposable income : Yd = Y – Tx
Investment : I (r) = 200 – 2 r
LM : M/P = L(Y, r)
Real money demand : L(Y, r) = 300 + 0.5 Y – 5 r
Money supply : Ms = M
What
is the value of taxes multiplier?