Question: After carefully reading all the available information , prepare a two page (double spaced ) essay and answer the following questions : Assume that we


After carefully reading all the available information , prepare a two page (double spaced ) essay and answer the following questions : Assume that we have the following data : C =100 +0.50Y 1 =100 -20r M.=0.10Y M. = 100 -10r M =80 a. Build the IS-LM function . b. If we assume an increase in Investments by 100 units , calculate again the IS - LM functions c. The intersection of IS-LM functions defines four areas . Analyze the behavior of the markets for goods and money for each area . Cite references to material that you use in preparing the essay THE IS-LM FUNCTION 2 In this essay this issue will be discussed : The IS-LM function According to Wright, R.E., & Quadrini, V. (April 2009) "The IS curve shows the points at which the quantity of goods supplied equals those demanded . The LM curve traces the equilibrium points for different interest rates where quantity of money equals the quantity of money supplied." Assume that we have the following data C = 100 + 0.50Y Ip = 100 -20r Mt = 0.10Y Ms = 100 -10r M = 80 Build the IS-LM function
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
