The LM curve
... schedule-- M=0.25Y-5r, IS schedule-- r=0 I+G+0.2Y*-0.2Y+50RE) FE schedule-- r=r* where M is the nominal money stock, Y is the domestic income, r is the domestic interest rate, r* is the foreign interest rate, I is the autonomous domestic investment spending, G is the government spending, Y* is the foreign income and RE is the exchange rate.
I=100, G=100, Y*=500, r*=5
a)suppose the exchange rate is fixed at 1. what is the resulting equlibrium level of income and the money supply explain
IS curve or IS schedule explains the investments and savings aspect of market or economy. This explains the activity of goods and services performance in the economy. The LM curve, on the other hand, explains th...