Writers Den

IS / LM Analysis

A macroeconomic model of Econoland can be summarized as
follows:

C = 100 + 0.5(Y – T)

I = 0.25 Y – 500(r)

G0 = 300

T0 = 100

X0 = 200

M0 = 200

M D = 10Y – 20,000(r)

M S0 = 200

Part a – Derive the equation for the IS Schedule

Part b – Derive the equation for the LM Schedule

Part c – Calculate the equilibrium interest rate (r)

Part d – Calculate the equilibrium level of income (Y)