Consider the economy of Hicksonia.a. The consumption function is given byC=300+0.6(Y−T).The

Consider the economy of Hicksonia.

a. The consumption function is given by

C=300+0.6(Y−T).

The

investment function is

I=700−80r.

Government purchases and taxes are both 500. For this economy, graph the IS

curve for r ranging from 0 to 8.

b. The money demand function in Hicksonia is

(M/P)d=Y−200r.

The money supply M is 3,000, and the price level P is 3. Graph the LM curve for

r ranging from 0 to 8.

c. Find the equilibrium interest rate r and equilibrium income Y.

d. Suppose that government purchases are increased from 500 to 700. How does

the IS curve shift? What are the new equilibrium interest rate and income?

e. Suppose instead that the money supply is increased from 3,000 to 4,500. How

does the LM curve shift? What are the new equilibrium interest rate and

income?

f. With the initial values for monetary and fiscal policy, suppose the price level

rises from 3 to 5. What happens? What are the new equilibrium interest rate

and income?

g. For the initial value of monetary and fiscal policy, derive and graph an

equation for the aggregate demand curve. What happens to this aggregate

demand curve if fiscal or monetary policy changes, as in parts (d) and (e)?

Show more







Calculate Your Essay Price
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more

Order your essay today and save 10% with the coupon code: best10