Question: Question 3 (20 marks) Consider the following macroeconomic model. =++ (1) =+ (2) = (3) = (4) = (5) = (6) 1. Use equations 1-6

Question 3 (20 marks) Consider the following macroeconomic model. =++ (1) =+ (2) = (3) = (4) = (5) = (6) 1. Use equations 1-6 to solve for the IS and LM curve. 2. Write the system of equations in matrix form, Ax=b. 3. Solve for Y and i using Cramer's rule 4. Using the solution for Y for part 3, compute the effect on Y of a change in and a change in . Fully explain how the size of these are related to the values of k and l.

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