Given the equations below representing Consumption, Investment, Money Demand, Government Spending, and Money Supply, respectively, C=a+b(Y-T)...

 

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Given the equations below representing Consumption, Investment, Money Demand, Government Spending, and Money Supply, respectively, C=a+b(Y-T) 1=d-eR L=fY-gR G=G M = M where T, G. and M are exogenous variables and a, b, d, e, f, and g are parameters. Construct a 2-equation IS-LM Model where the equilibrium condition in the goods market is represented by Y=C+I+G and the equilibrium condition in the money (asset) market is represented by L=M. Express the equation system in matrix format, with national income Y and interest rate R as the endogenous variables. Given the equations below representing Consumption, Investment, Money Demand, Government Spending, and Money Supply, respectively, C=a+b(Y-T) 1=d-eR L=fY-gR G=G M = M where T, G. and M are exogenous variables and a, b, d, e, f, and g are parameters. Construct a 2-equation IS-LM Model where the equilibrium condition in the goods market is represented by Y=C+I+G and the equilibrium condition in the money (asset) market is represented by L=M. Express the equation system in matrix format, with national income Y and interest rate R as the endogenous variables.

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Answer Soln This C a b 17 I d eR Goods MKt Money Lf... View the full answer