# C=100+0.8Y, I=150-6r, G= 100,7 = 0.25Y, M = 0.2Y-2r, M = 300, P=2, Where C- consumption, I- investment, r- interest rate, y-disposable income, T-tax, G- government expenditure, M-money demand, M-nominal money supply and P-price. Find; ii. If the economy opens up: X=100, M = 20+0.1 where X-imports and M- imports find new equilibrium income level. (6 marks) iii. Find the

C=100+0.8Y", I=150-6r, G= 100,7 = 0.25Y, M" = 0.2Y-2r, M = 300, P=2, Where C- consumption, I- investment, r- interest rate, y-disposable income, T-tax, G- government expenditure, M"-money demand, M-nominal money supply and P-price. Find;

ii. If the economy opens up: X=100, M = 20+0.1 where X-imports and M- imports find new equilibrium income level.

(6 marks)

iii. Find the direction and magnitude of shift in LM curve if nominal money supply is doubled and in IS curve when G increases from 100 to 400.

(8 marks)

iv. How is your answer in part (i) affected if price is also doubled along with nominal money supply?

(6 marks)

**Related Book For**

## Income Tax Fundamentals 2013

31st Edition

Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill

ISBN: 9781285586618

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