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Principles of Money, Banking & Financial Markets 12th Edition by Lawrence Ritter,William Silber,Gregory Udell
Edition 12ISBN: 978-0321339195Principles of Money, Banking & Financial Markets 12th Edition by Lawrence Ritter,William Silber,Gregory Udell
Edition 12ISBN: 978-0321339195 Exercise 9
Assume an economy can be described by the following equations:
(1) C = 400 +.9( Y - T )
(2) I = 200 - 10 r
(3) T = 40 +.2 Y
(4) G = 150
(5) L = 1,000 - 10 r +.1 Y
(6) M = 1,000
a. Sketch the resulting IS and LM curves.
b. What are the equilibrium levels of Y and r
c. Imagine that full employment occurred at Y = 2,500. Provide one fiscal policy and one monetary policy that will move this economy to that level. Be specific: How much of each variable needs to be changed to arrive at full employment
(1) C = 400 +.9( Y - T )
(2) I = 200 - 10 r
(3) T = 40 +.2 Y
(4) G = 150
(5) L = 1,000 - 10 r +.1 Y
(6) M = 1,000
a. Sketch the resulting IS and LM curves.
b. What are the equilibrium levels of Y and r
c. Imagine that full employment occurred at Y = 2,500. Provide one fiscal policy and one monetary policy that will move this economy to that level. Be specific: How much of each variable needs to be changed to arrive at full employment
Explanation
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Principles of Money, Banking & Financial Markets 12th Edition by Lawrence Ritter,William Silber,Gregory Udell
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