Assume the following functions are for the goods market of a hypothetical economy: (1) I = 150 – 10r; (2) C=700+0.8Yd (3

[answerhappygod]

Assume The Following Functions Are For The Goods Market Of A Hypothetical Economy 1 I 150 10r 2 C 700 0 8yd 3 1 (107.28 KiB) Viewed 37 times

Assume the following functions are for the goods market of a hypothetical economy: (1) I = 150 – 10r; (2) C=700+0.8Yd (3) T=50+0.25Y (4) G=180 Note: Y is income and r is the interest rate a) Derive the IS curve for this economy. b) Use appropriate scale to sketch the IS curve is part (a) above. c) Determine and interpret the slope of the IS curve in part a) above. d) Explain how a change in each of the following will affect the IS curve in part a) above: i) A balance budget increase in government expenditure of 60 units. ii) An increase autonomous consumption to 800 units iii) An increase in the interest sensitivity of investment to 20. iv) An increase in the marginal propensity to save to .025. V) A decrease in the marginal tax rate to 0.15.