consider an economy specified by the, Basic Statistics

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consider an economy specified by the

Consider an economy specified by the following:

Y = PE = C + I + G + NX (Income identity)

C = 400 + 0.9YD (Consumption)

I = 200 - 1,800i (Investment)

NX = 200 - 0.1Y - 200i (Net exports)

M^D = (0.8Y - 3,000i) (Money demand)

Also assume that government spending G = $200, the tax rate t = 0.3333, and the money supply M^S = $1,104 (and assume the price level is constant at P = 1).

a. What is the IS curve?

b. What is the LM curve?

c. What are the values of income (Y) and the interest rate (i) when the IS-LM model is in equilibrium?

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