Question: Please show all the steps and work to solve the problem, but also please visually emphasize your …

02 May Question: Please show all the steps and work to solve the problem, but also please visually emphasize your …

Posted at 07:41h in 2Past Paper by Exams

1. (26 marks total) Math Review: Recall the IS-LM model from your intermediate macro course. In particular, the goods-market equilibrium condition was Y C (Y-T) + 1 (r) + G, and the money-market equilibrium condition was m L(r, Y). Here, the exogenous variables are G (government spending). T (taxes), and m (real money supply). The endogenous variables ar Y (output, or income) and r (real interest rate). C() is the consumption function, which is increasing in disposable income Y -T, but less than one-for-one (i.e., 0

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