Business, 18.03.2020 21:51 bosa1423ov5zrr

This problem asks you to analyze the is-lm model algebraically. suppose consumption is a linear function of disposable income c(y-t) = a + b(y-t) where z>0 and 01. the parameter b is the marginal propensity to consume, and the parameter a is a constant sometimes called autonomous consumption. suppose also that investment is a linear function of the interest rate: i(r) =c - dr where c>0 and d>0. the parameter d measures the sensitivity of investment to the interest rate, and the parameter c is a constant sometimes called autonomous investment. a solve for y as a function of r, the exogenous variables g and t, and the model's parameters a, b, c and

d.

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This problem asks you to analyze the is-lm model algebraically. suppose consumption is a linear func...

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