Elucidate what the equilibrium interest rates for the, Ask an Expert

Economics

Q. Assume to the equation for autonomous planned spending is Ap = 6,200 - 200r also the value of the multiplier, k, 2.5.

(a) Derive the equation for the IS curve, Y=kAp. Graph the IS curve for interest rates among 0 also 8, with intervals of one-half of a percent (%)age point.

(b) Assume the equation for the LM Curve is Y=13,500 +100r. Utilize this equation to Elucidate the level of income at that there is a zero lower bound on the federal funds rate the interest rate to the Fed controls.

(d) Assume to the term premium is 1.0 percent (%)age point also the risk premium is 2.0 percent (%)age points. utilize the LM curve with the zero lower bound also term premium also risk premium to graph the LM curve for the government bond rate also the LM curve for the private bond rate at interest rates among 0 also 8, with intervals of one-half of a percent (%)age point.

(e) Utilize the graphs of the IS curve also the three LM curves to Elucidate what the equilibrium interest rates for the federal funds rate the government bond rate also the private bond rate are also Illustrate what the equilibrium level of income is.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M9169481

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