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An economy is given by the following equations: C=100+0.5(Y-T) T=100 G=200 I=50-2r (M/P)S = (M/P)d =Y-6r Using the given information, answer the following : a). Assuming P=10 and M=4000, Solve for equilibrium values of Y and r b). Assume that the Federal government reduces spending to balance the budget. Calculate the effective IS-LM multiplier and explain why the equilibrium reduction in output was less than the value implied by the Keynesian cross-multiplier. An economy is given by the following equations: C=100+0.5(Y-T) T=100 G=200 I=50-2r (M/P)S = (M/P)d =Y-6r Using the given information, answer the following : a). Assuming P=10 and M=4000, Solve for equilibrium values of Y and r b). Assume that the Federal government reduces spending to balance the budget. Calculate the effective IS-LM multiplier and explain why the equilibrium reduction in output was less than the value implied by the Keynesian cross-multiplier.

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part 1 Given 10005 YT T 100 3D G 200 MPS MIP Y69 Solve for the equlibnum valu of y omd Y Assumng P10 ... View the full answer