(25 points) The following equations are given to describe an economy: C=5000+0.6Y_(D) I=100+0.2Y-1000i T=1000 G=1500 ((M)/(P))^(S)=6000 ((^(M))/(P))^(D)=2Y-8000i where C,Y_(D),I,T,G,i,M, and P represents consumption, disposable income, investment, taxes, government expenditure, interest rate, nominal money supply and price level, respectively. a. D

Question

(25 points) The following equations are given to describe an economy:

C=5000+0.6Y_(D)
I=100+0.2Y-1000i
T=1000
G=1500

((M)/(P))^(S)=6000
((^(M))/(P))^(D)=2Y-8000i

where

C,Y_(D),I,T,G,i,M

, and

P

represents consumption, disposable income, investment, taxes, government expenditure, interest rate, nominal money supply and price level, respectively. a. Derive IS equation. b. Derive LM equation. c. Graph IS and LM curves together. d. Solve for equilibrium

Y

and

i

. Also, find

C

and

I

. e. Find equilibrium

Y

and

i

if money supply

((M)/(P))^(S)

increases by 18000 . Also, find

C

and

I

.

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Solution for - (25 points) The following equations are given to describe an economy: C=5000+0.6Y_(D) I=100+0.2Y-100

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