You are given the following equations: r=4-Y r=1-25+/Y 2P IS curve LM curve a) Is this information sufficient to calculate output and interest rate values in the short run IS-LM equilibrium? If not, what other information do you need to do that? Please explain graphically why that extra information enables you to calculate equilibrium output and interest rate. b) Write the AD equation corresponding to the two IS and LM equations above. The following information is now added: Y = Y + 4(P - Pe); where Y = 4; Pe = 2 SRAS curve

You are given the following equations: r=4-Y r=1-25+/Y 2P IS curve LM curve a) Is this information sufficient to calculate output and interest rate values in the short run IS-LM equilibrium? If not, what other information do you need to do that? Please explain graphically why that extra information enables you to calculate equilibrium output and interest rate. b) Write the AD equation corresponding to the two IS and LM equations above. The following information is now added: Y = Y + 4(P - Pe); where Y = 4; Pe = 2 SRAS curve

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter4: Estimating Demand

Section: Chapter Questions

Problem 6E

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