Question: 2. Consider the following numerical example of the IS-LM model: C= 100+ 0.3YD I = 150+ 0.2Y 1000i T = 100 G= 200 = 0.01

2. Consider the following numerical example of the IS-LM model: C= 100+ 0.3YD I = 150+ 0.2Y 1000i T = 100 G= 200

2. Consider the following numerical example of the IS-LM model: C= 100+ 0.3YD I = 150+ 0.2Y 1000i T = 100 G= 200 = 0.01 (M/P)d = 2Y 4000i (e) Contractionary monetary policy. Suppose that the central bank increases the interest rate to 0.03. What is the impact of this contractionary monetary policy on the IS and LM curves? Find the new equilibrium values of output, consumption, investment and real money supply. () Expansionary fiscal policy. Suppose that the government increases its spending G to 300 (keeping i = 0.01). What is the impact of this expansionary fiscal policy on the IS and LM curves? Find the new equilibrium values of output, consumption, investment and real money supply. 2. Consider the following numerical example of the IS-LM model: C= 100+ 0.3YD I = 150+ 0.2Y 1000i T = 100 G= 200 = 0.01 (M/P)d = 2Y 4000i (e) Contractionary monetary policy. Suppose that the central bank increases the interest rate to 0.03. What is the impact of this contractionary monetary policy on the IS and LM curves? Find the new equilibrium values of output, consumption, investment and real money supply. () Expansionary fiscal policy. Suppose that the government increases its spending G to 300 (keeping i = 0.01). What is the impact of this expansionary fiscal policy on the IS and LM curves? Find the new equilibrium values of output, consumption, investment and real money supply

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