Hi,

Read Chapters 19, 20, 21, 22 of the Textbook, Money and Banking (Robert E. Wright, Vincenzo Quadrini)

After carefully reading all the available information,
prepare a two page (double-spaced) essay answering the following questions:

Assume that we have the following data:

C=100+0.50Y

I
_p=100-20r

M
_t=0.10Y

M
_s=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

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