Equilibrium in the money market in the is-lm-model we, Ask an Expert

Economics

Equilibrium in the money market

In the IS-LM-model, we have equilibrium in the money market when

MD(Y, R) = MS

This is the equation from money market and we have already one equation from aggregate demand which is,

YD(Y, R) = C(Y) + I(R) + G + X - Im(Y)

Now we will conclude all endogenous variables in the IS-LM model:

Y_D(Y, R) = Y equilibrium in the goods market

M_D(Y, R) = M_S equilibrium in the money market

Now we have two equations and two unknown (Y and R) and in most cases we can find a unique solution to system of equations.

View complete question

Macroeconomics, Economics

Category:- Macroeconomics
Reference No.:- M9577737

Have any Question?Write your Review or question?

Related Questions in Macroeconomics

Question - consider firms in the market for get-rich-quick

Question - Consider firms in the market for get-rich-quick schemes. For this problem, assume get-rich-quick schemes are indivisible (so there can only be 1, 2, 3, etc.). Now, the more schemes there are in the market the ...

Questions 1 in country faraway cigarettes are forbidden so

Questions: 1. In Country Faraway, cigarettes are forbidden, so people trade cigarettes in a blackmarket. The cigarette demand is QD = 12 - P, and the cigarette supply is Qs = 2P. a. Find the equilibrium price and quantit ...

Question according to your textbook in the aggregate supply

Question: According to your textbook in the Aggregate Supply (AS) theory an increase in output leads to an increase in the price level. What is the assumed causality? Explain why this should be considered flawed? The res ...

Question - brazil points to its shrimp-farming industry as

Question - Brazil points to its shrimp-farming industry as an example of how it can export shrimp in the world market. One decade ago, Brazil exported a meager 400 tons of shrimp. Today, Brazil exports more than 58,000 t ...

Question - a 1000 utility bond with 14 years remaining

Question - A $1000 utility bond with 14 years remaining before maturity can now be purchased for $760. It pays interest of $20 each 6-month period. What rate of return is earned by purchasing the bond at the current mark ...

Question consider the maximum entropy ensemble for the erd

Question: Consider the maximum entropy ensemble for the Erd ?os-R ´enyi random graph model P(G; ß), as discussed in class. Compute the Shannon entropy S[P] = S(ß) of this ensemble as a function of ß and N. As a function ...

Question - recall that the long-run world oil demand

Question - Recall that the long-run world oil demand equation is Upper Q equals 41.6 minus 0.12 Upper PQ=41.6-0.12P and the long-run total oil supply equation is Upper Q equals 26.3 plus 0.071 Upper PQ=26.3+0.071P. The l ...

Question tara is considering leaving her current job which

Question: Tara is considering leaving her current job, which pays $56,000 per year, to start a new company that manufactures a line of special pens for personal digital assistants. Based on market research, she can sell ...

Question 1 consider the following market for a public good

Question: 1) Consider the following market for a public good. Jules and Zooey each have a demand curve for the good given by P = 8 - 2Q. This public good can be supplied at a constant price MC=$8 (a) If Jules and Zooey a ...

Question assume an economy is described by the following

Question: Assume an economy is described by the following economic parameters: C = 0.8YD YD = Y + TR - tY TR = 100 t = 0.3 I = 1000 - 65i G = 600 L = 0.25Y - 75i M/P = 600 What is the equation that describes the IS curve ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Macroeconomics Expert