ECON 401A Hartman Autumn 2010 ANSWERS FOR PROBLEM SET I 1. 22100DPNW2.a. 8DH, 16DWCP, and 16SN2.b. 224DPHW, 244DWPCPW, and 22244SPNW3.a. The IS equation is 195851010YrTGThe LM equation is 210MP3.b. 850910511111111MYTGPand 170921115511110MrTGP3c. If Gincreases and T, M, and Pdo not change, then 10011YGand 2011rG. If G and T increase by the same amount with no change in M and P,then (/)01011dG dT dXdMPdYdXand )01055dG dT dXdrdX. If M increases with no change in P, G, and T, then 005011dG dTdpYdYMdMpand 0010110dG dTdprdrMp.4.a. *400N, *(/) 1/2, and *400Y. 4.b. 10%riand 2P. 4.c. The equilibrium value of rincreases, the equilibrium value of Idecreases, and the equilibrium value of Pincreases. 4.d. Yes. Since neither Ynor Tchange, the increase in Gdoes not change C, and therefore the IS relationship implies that
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