- Consumption Spending C 7000 0 95 Y T Private Investment 1 2000 500 Government Spending G 300 Taxes T 400 Real Money 1 (14.58 KiB) Viewed 26 times
Consumption spending: C-7000+0.95(Y-T) Private investment: 1-2000-500 Government spending: G-300 Taxes: T-400 Real money
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Consumption spending: C-7000+0.95(Y-T) Private investment: 1-2000-500 Government spending: G-300 Taxes: T-400 Real money
Consumption spending: C-7000+0.95(Y-T) Private investment: 1-2000-500 Government spending: G-300 Taxes: T-400 Real money demand: (M/P)-Y-1200r Real money supply: (M/P)-2000. a) Find the equation for the IS curve when the goods market gets to the equilibrium (4 points) b) Find the equation for the LM curve when the money market gets to the equilibrium. (4 points) c) Solve for the equilibrium real output and interest rate when both goods and money markets get to the equilibrium. (4) points)