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Macroeconomic Modeling
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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
If G increases by 10 the equilibrium income increase 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 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 government spending multiplier?
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
Derive IS curve Y= f1(r; T, G). What is the slope of IS curve