The economy of Bananaland can be characterized by Equation below C= 1,000+ 0.5Yd T = 200...

 

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The economy of Bananaland can be characterized by Equation below C= 1,000+ 0.5Yd T = 200 G = 400 I=500-200r a) Derive the IS curve equation using the AE-AS and injection-leakage approaches. b) Calculate the income and draw the IS curve if interest rate is assumed to be 2 percentage and 4 percentage. c) If autonomous government expenditure decreases by 200, what is the new equilibrium of income at same level of interest rate in b). Draw the new IS curve. d) If autonomous investment increases by 100, calculate the new equilibrium of income at the same level of interest rate in b). Draw the new IS curve. e) If taxes increase by 300, calculate the new equilibrium of income at the same level of interest rate in b). Draw the new IS curve. The economy of Bananaland can be characterized by Equation below C= 1,000+ 0.5Yd T = 200 G = 400 I=500-200r a) Derive the IS curve equation using the AE-AS and injection-leakage approaches. b) Calculate the income and draw the IS curve if interest rate is assumed to be 2 percentage and 4 percentage. c) If autonomous government expenditure decreases by 200, what is the new equilibrium of income at same level of interest rate in b). Draw the new IS curve. d) If autonomous investment increases by 100, calculate the new equilibrium of income at the same level of interest rate in b). Draw the new IS curve. e) If taxes increase by 300, calculate the new equilibrium of income at the same level of interest rate in b). Draw the new IS curve.

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