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Chapter 11. Consider an economy described by the following equations.pdf

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Chapter 11. Consider an economy described by the following equations: CIGTL(r,Y)MP=200+0.75(YT)=20025r=100=100=Y100r=1,000=2 (f) [15 points] Suppose that the government purchases are raised from 100 to 150 . How does the IS curve shift? What are the new equilibrium interest rate and level of income? (g) [15 points] Suppose instead that the money supply is raised from 1,000 to 1,200 . How dose the LM curve shift? What are the new equilibrium interest rate and level of income? (h) [15 points] With the initial values for monetary and fiscal policy, suppose that the price level rises from 2 to 4 . What are the new equilibrium interest rate and level of income?.

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Chapter 11. Consider an economy described by the following equations: CIGTL(r,Y)MP=200+0.75(YT)=20025r=100=100=Y100r=1,000=2 (f) [15 points] Suppose that the government purchases are raised from 100 to 150 . How does the IS curve shift? What are the new equilibrium interest rate and level of income? (g) [15 points] Suppose instead that the money supply is raised from 1,000 to 1,200 . How dose the LM curve shift? What are the new equilibrium interest rate and level of income? (h) [15 points] With the initial values for monetary and fiscal policy, suppose that the price level rises from 2 to 4 . What are the new equilibrium interest rate and level of income?

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