q7 Consider the following IS-LM model:I= 150 + .25Y - 1000i ,(M/P) = 2Y - 8000i ,C = 200 + .25YD,G= 250,T= 200,NX = 0,M/P = 1600.a) Derive the IS relation.b) Derive the LM relation.c) Solve for equilibrium real output (Y*).

The IS refers to the investment and savings model that equates total investment to equal total…

Consider the following IS–LM model: C = 200 + .25YD, NX =0, I= 150 + .25Y - 1000i , (M/P) = 2Y - 8000i , G= 250 , T= 200 , M/P = 1600. a) Derive the IS relation. b) Derive the LM relation. c) Solve for equilibrium real output (Y*).

Consider the following IS–LM model: C = 200 + .25YD, NX =0, I= 150 + .25Y - 1000i , (M/P) = 2Y - 8000i , G= 250 , T= 200 , M/P = 1600. a) Derive the IS relation. b) Derive the LM relation. c) Solve for equilibrium real output (Y*).

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

Consider the following IS-LM model:
I= 150 + .25Y - 1000i ,
(M/P) = 2Y - 8000i ,
C = 200 + .25YD,
G= 250,
T= 200,
NX = 0,
M/P = 1600.
a) Derive the IS relation.
b) Derive the LM relation.
c) Solve for equilibrium real output (Y*).

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