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The Economics of Money, Banking, and Financial Markets 10th Edition by Frederic Mishkin
Edition 10ISBN: 978-0132763646The Economics of Money, Banking, and Financial Markets 10th Edition by Frederic Mishkin
Edition 10ISBN: 978-0132763646 Exercise 12
Go to www.eurmacro.unisg.ch/Tutor/islm.html. Set the policy instruments to be G = 80, t = 0.20, c = 0.75, b = 40. Now increase government spending, G, from 80 to 160. How much does the IS curve shift horizontally to the right? Why is this amount greater than the increase in G? Now increase the marginal propensity to consume, c, from 0.75 to 0.90. Which direction does the IS curve shift and why? How much does it shift? Now increase the tax rate, t, from 0.20 to 0.28. Which direction does the IS curve shift and why? How much does it shift?
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The Economics of Money, Banking, and Financial Markets 10th Edition by Frederic Mishkin
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