IS - LM:

Consider an economy where:

C =100 + (1/3) (Y - T).

I= 800 - 100r

G = 300

T = 400

(M/P)^d = 0.5Y + 300

M = 1600

P = 2

a) Derive the IS and LM curve and calculate all equilibrium values for this economy and also draw the graph.

Answer rating: 100% (QA)

To derive the IS and LM curves we start by setting the goods market equilibriu... View the full answer