This preview shows page 1. Sign up to view the full content.
Unformatted text preview: (c) Derive the LM curve for this economy. (d) Find the required equilibrium income for the money market when r = 30. Is this an equilibrium in the economy? What is the government budget deficit? (e) If full employment income is Y = 1600, at what level should the government set spending G to reach full employment? (f) What alternative policy could the government use to reach full employment? 3. (a) Examine the conditions under which the IS curve will be steep or flat. (b) Examine the conditions under which the LM curve will be steep or flat (c) Explain the implications of your answers to (a) and (b) for the debate between Keynesians and monetarists....
View Full Document
This note was uploaded on 03/15/2012 for the course EC 111 taught by Professor Timhatton during the Spring '12 term at Uni. Essex.
- Spring '12