Problem
Y5
C = 500 + 0.75(Y-T)
P = 2
I = 100 - 50r
(M/P)^D = y - 200r
G = 1000
T = 1000
M = 6000
i. Derive IS-LM curve
ii. Solve for equilibrium
iii. Cut taxes by 20% & keep M constant r=y
iv. Engage in monetary policy to keep interest rate constant new MS
v. What monetary policy is needed to keep output constant?