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 rate

Crowdly

Add to Chrome

✅ The verified answer to this question is available below. Our community-reviewed solutions help you understand the material better.

Consider

following static IS-LM model:

: Y = C(Yd) + I (r) + G

Consumption : C(Yd) = 100 + 0.75 Yd

Disposable income : Yd = Y – Tx

Investment : I (r) = 200 – 2 r

: 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 rate

100%

0.5

Get Unlimited Answers To Exam Questions - Install Crowdly Extension Now!

Add to Chrome