Consider the following macroeconomic models: Given that Y= C+I+G+NX-------income identity

C=100+0.9Yd

I=200-5000r

Nx=100-0.12Y-500r

Money demand M/P=0.8y-2000r and G=200, tax rate t=0.2, nominal money supply m=800 and the pre determined price level p=1

Required:

a) Is curve equation

b) LM curve equation

c) The value of c,y,r,I and NX

d) Determine the AD curve and show by how much an increase in government expenditure or real money of 100 increases GDP e) Compare your answer for government spending to the government spending multiplier

Answer rating: 100% (QA)

a IS Curve Equation The IS curve represents the equilibrium in the goods market The equation for the ... View the full answer