13. Assume the following model of the economy, with the price level fixed at 1.0: C = 0.8( Y-T), T = 1000 I = 800 - 20 r

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13 Assume The Following Model Of The Economy With The Price Level Fixed At 1 0 C 0 8 Y T T 1000 I 800 20 R 1 (74.31 KiB) Viewed 47 times

13. Assume the following model of the economy, with the price level fixed at 1.0: C = 0.8( Y-T), T = 1000 I = 800 - 20 r, G = 1000 Y=C+I+G M./P = Mg/P = 0.4 Y-40r M = 1200 a. Write a formula for the IS-eurve, showing as a function of Falone Write a formula for the LM curve, showing as a function of atone What are the short run equilibrium values of YIYOT, Bt private saving, publie saving, and national saving? Cheek by ensuring that € +++G=Y and national saving equals 1. d. Assume that G increases by 200. By how much will Y increase in equilibrium? What is the government purchases multiplier (the change in Y divided by the change in G e. Assume that G is back at its original level of 1000, but the money supply increases by 200. By how much will Y increase in equilibrium? What is the multiplier for money supply (the change in Y divided by the change in Ms)?