2. Consider a Keynesian IS-LM model for national income: Y=C(Y-T) + I (r) + G L(r,Y)= M³ IS: LM: where we consider Y and r as the endogenous variables and G, M³, and T as the exogenous variables. (b) Find the effect of a lump-sum tax, T, change on r, i.e., dr/T, using the implicit function theorem.

2. Consider a Keynesian IS-LM model for national income: Y=C(Y-T) + I (r) + G L(r,Y)= M³ IS: LM: where we consider Y and r as the endogenous variables and G, M³, and T as the exogenous variables. (b) Find the effect of a lump-sum tax, T, change on r, i.e., dr/T, using the implicit function theorem.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter10: Keynesian Macroeconomics And Economic Instability: A Critique Of The Self Regulating Economy

Section: Chapter Questions

Problem 7QP

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