Let the IS equation beA9-b 1-bY =where 1-b is the marginal propensity to save, g is the investment sensitivity to inter-est rates, and A is an aggregate of exogenous variables. Let the LM equation beMo 1k1- +ikwhere k and I are income and interest sensitivity of money demand, respectively, andMo is real money balances.If b=0.7, g=100, A = 252, k = 0.25, = 200, and M = 176, then(a) Write the IS-LM system in matrix form.

IS curve is the goods market equilibrium and the LM curve is the money market equilibrium. For IS…

Let the IS equation be A 1-b where 1 -b is the marginal propensity to save, g is the investment sensitivity to inter- est rates, and A is an aggregate of exogenous variables. Let the LM equation be Mo. 1. k where k and I are income and interest sensitivity of money demand, respectively, and Mo is real money balances. If b=0.7, g=100, A = 252, k = 0.25, != 200, and M = 176, then (a) Write the IS-LM system in matrix form. Y = 9 -1 1-b

Let the IS equation be A 1-b where 1 -b is the marginal propensity to save, g is the investment sensitivity to inter- est rates, and A is an aggregate of exogenous variables. Let the LM equation be Mo. 1. k where k and I are income and interest sensitivity of money demand, respectively, and Mo is real money balances. If b=0.7, g=100, A = 252, k = 0.25, != 200, and M = 176, then (a) Write the IS-LM system in matrix form. Y = 9 -1 1-b

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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