Suppose that the economy is characterized by the followingbehavioural equations:• C = 300+ 0.3 YdI= 250+ 0.3 Y - 1,200i• G = 150• T = 200d(M)⁰S(³=2Y - 6,000i= 1,500a) Identify or solve the following:• IS Relation• LM Relation• Equilibrium Real Output (Y)• Equilibrium Interest Rate (i)• Equilibrium Consumption (C)• Equilibrium Investment (1)b) If the government increases taxes by 50, ceteris paribus, identifyor solve the following:• IS Relation• LM Relation• Equilibrium Real Output (Y)• Equilibrium Interest Rate (i)• Equilibrium Consumption (C)• Equilibrium Investment (1)

Here we are given various components of the goods market and the money market. We will use the goods…

Answered: Suppose that the economy is…

Suppose that the economy is characterized by the following behavioural equations: • C = 300+ 0.3 Yd I= 250+ 0.3 Y - 1,200i G = 150 • T = 200 d = 2Y - 6,000i S ● · (²)³ = = 1,500

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

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Suppose that the economy is characterized by the following
behavioural equations:
• C = 300+ 0.3 Yd
I= 250+ 0.3 Y - 1,200i
• G = 150
• T = 200
d
(M)⁰
S
(³
=
2Y - 6,000i
= 1,500
a) Identify or solve the following:
• IS Relation
• LM Relation
• Equilibrium Real Output (Y)
• Equilibrium Interest Rate (i)
• Equilibrium Consumption (C)
• Equilibrium Investment (1)
b) If the government increases taxes by 50, ceteris paribus, identify
or solve the following:
• IS Relation
• LM Relation
• Equilibrium Real Output (Y)
• Equilibrium Interest Rate (i)
• Equilibrium Consumption (C)
• Equilibrium Investment (1)

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