4% 6% ?8% QUESTION 29 Find the equilibrium level of income (Y\") and interest ra

Question

4% 6% ?8% QUESTION 29 Find the equilibrium level of income (Y") and interest rate () using the IS and LM equations below Y=500-20r LM equation - 200 +30r (Note this math question is worth 10 points) Y* = 260, r* = 2 rt-6 all) Y* = 300, r* 5 QUESTION 30 Essay- Choose any 2 countries from those listed under the Countres" tab at the World Bank ank orak You should eu and pase the ink separaiely onto another scren to avoid losing recent macrceconomic performance, focusing on the factors that have influenced Comnare the 2 countries

Explanation / Answer

ans :

IS : Y= 500 - 20r

LM: Y = 200 +30r

equating both the equations for achieving equilibrium

500 -20r = 200 +30r

=> 300 = 50r

=> 300/50 = r

=> 6 = r*

substituting r* = 6 in IS equation to get Y*

Y* = 500 - 20(6) = 380

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