# Question

Assume the following equations summarize the structure of an economy.

C=Ca+0.85(Y-T)Ca=260-10rT=200+0.2y(M/p)d=0.25y-25rMs/p=2125Ip=1500-30rG=1700NX=500-0.08y

A) Compute the value of the multiplier.

B) Derive the equation for the autonomous planned spending schedule, Ap

C) Derive the equation for the IS curve

D) Calculate the slope of the IS curve, Change in R/ Change in Y ( hint use the equation of the IS curve to compute change Y/ Change in r . Then use the fact that the slope of the IS curve change r/ change in Y equals the inverse of change in Y/ change in r

E) Derive the equation for the LM curve.

F) Calculate the slope of the LM curve change in R/ Change Y ( to do this use the same hint as in part d)

G) Compute the equilibrium interest rate (r)H) Compute the equilibrium real output (Y)

C=Ca+0.85(Y-T)Ca=260-10rT=200+0.2y(M/p)d=0.25y-25rMs/p=2125Ip=1500-30rG=1700NX=500-0.08y

A) Compute the value of the multiplier.

B) Derive the equation for the autonomous planned spending schedule, Ap

C) Derive the equation for the IS curve

D) Calculate the slope of the IS curve, Change in R/ Change in Y ( hint use the equation of the IS curve to compute change Y/ Change in r . Then use the fact that the slope of the IS curve change r/ change in Y equals the inverse of change in Y/ change in r

E) Derive the equation for the LM curve.

F) Calculate the slope of the LM curve change in R/ Change Y ( to do this use the same hint as in part d)

G) Compute the equilibrium interest rate (r)H) Compute the equilibrium real output (Y)

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