Question: Assume that money demand is given by ( M / P ) d = 0 . 5 Y 1 0 0 r , and (
Assume that money demand is given by M Pd Y r and M Ps equals
Write the LM curve two ways, expressing Y as a function of r and r as a function of YHint: Write the LM curve only relating Y and r using the equilibrium condition for the market for real money balances.
Express the equation two ways: Y as a function of r; r as a function of Y
What is the slope of the LM curve where r is on the yaxis and Y on the xaxis
If r is percent, what is Y along the LM curve?
If r is percent, what is Y along the LM curve?
If r is percent, what is Y along the LM curve?
If MP increases, does the LM curve shift upward and to the left or downward and to the right?
If M increases and P is constant, does the LM curve shift upward and to the left or downward and to the right?
If P increases and M is constant, does the LM curve shift upward and to the left or downward and to the right?
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