Essay
Assume that the consumption function is given by C = 200 + 0.5 (Y - T), and the investment function is I = 1,000 - 200r, where r is measured in percent, G equals 300, and T equals 200.
a.What is the numerical formula for the IS curve?
Correct Answer:
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a.Y = 2,800 - 400r or r = 7 - 0.0025Y.
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b...
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