Suppose that the following equations describes an economy: Consumption function: Investment function: Taxes: Government Spending: C(Y-T)...

 

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Suppose that the following equations describes an economy: Consumption function: Investment function: Taxes: Government Spending: C(Y-T) .5(Y-T)+30 I(r)=22-r T=30 G=10 Demand for real money balances: Money supply: Price level: L(r, Y) .5Y +12 M=350 P=7 a. Given the above equations, find the equation for the IS curve. Express the IS curve as r(Y). b. Given the above equations, find the equation for the LM curve. Express the LM curve as r(Y). c. Using the IS and LM curves derived in a. and b., determine the equilibrium interest ratee and output. Suppose that the following equations describes an economy: Consumption function: Investment function: Taxes: Government Spending: C(Y-T) .5(Y-T)+30 I(r)=22-r T=30 G=10 Demand for real money balances: Money supply: Price level: L(r, Y) .5Y +12 M=350 P=7 a. Given the above equations, find the equation for the IS curve. Express the IS curve as r(Y). b. Given the above equations, find the equation for the LM curve. Express the LM curve as r(Y). c. Using the IS and LM curves derived in a. and b., determine the equilibrium interest ratee and output.