Assume the Following Model of the Economy, with the Price

question 78

Essay

Assume the following model of the economy, with the price level fixed at 1.0:
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C = 0.8(Y - T)
T = 1,000
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I = 800 - 20r
G = 1,000
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Y = C + I + G
M^s / P = M^d / P = 0.4Y - 40r
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M^s = 1,200
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a.Write a formula for the IS curve, showing Y as a function of r alone.

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