After carefully reading all the available information, prepare a two page (double-spaced) essay and answer the following questions:
Assume that we have the following data:
C = 100+0.50Y
Ip = 100-20r
Mt = 0.10Y
Ms = 100-10r
M = 80
a. Build the IS-LM function.
b. If we assume an increase in Investments by 100 units, calculate again the IS-LM functions.
c. The intersection of IS-LM functions defines four areas. Analyze the behavior of the markets for goods and money for each area.
Cite references to material that you use in preparing the essay.