Macro Problem - Calculate the IS Curve & LM Curve Equations - Equilibrium Interest Rate & Output

In this problem, we're given equations that describe this economy, we're asked to explain each part of each equation, then derive the IS Curve and calculate the LM Curve. We graph the IS curve and LM curve diagrams. Then - using the IS and LM equations we just solved for - we find the equilibrium interest rate (r*) and real-income/real-output (Y*).
More Macroeconomics Problems: sites.google.c...
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~ 1:19 a. Identify each of the variables and briefly explain their meanings
~ 5:43 b. From the above list, use the relevant set of equations to derive the IS curve. Graph the IS curve on an appropriately labeled graph.
~ 9:13 c. From the above list, use the relevant set of equations to derive the LM curve. Graph the LM curve on the same graph you used in part (b)
~ 10:30 d. What are the equilibrium level of income and equilibrium interest rate?
From Mankiw's Macroeconomics (8th ed) Aggregate Supply Part 1 (Chapter 11) Problem 6
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[@economicurtis]

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[@alochukwuokolo5845]

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[@economicurtis]

At 6:44 I was simplifying the expression.
You'll notice that in the second line, there's a 120, a 0.5*(-40), a 100, and a 50,
thus 120-20+100+50 = 250.
To get the third line, we're just simplifying the expression by combining like terms.

[@dancanonyango06]

250+0.5y-10r. y=500-20r. How is that possible??

[@ifeoluwapokolapo]

@@dancanonyango06 (Make Y the subject) Y=250+0.5Y-10r,
Y-0.5Y=250-10r
0.5Y=250-10r
Y=500-20r

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[@colekampman7063]

Suppose Consumption = .6 (Y-T); Investment = 500/r; Real Money Demand = (10Y)/ r; the money supply is 1000 and the Price Level is 2. Let G=T=0.
a. Find the equation for the IS curve.
b..Find the equation for the LM curve.
c. What are the equilibrium values of Y and r?
d.. Suppose the Fed increases the money supply to 2000. Find the new equilibrium values of Y and r.

[@sharonchepkoech2664]

I am getting r as squareroot of -2 .....I doubt my answer

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[@unigrow5855]

Kindly clarify as to which edition of Mankiw’s Macro Economics.
Thanks

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[@angelangelov4193]

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[@economicurtis]

You're welcome!

[@thomasward7134]

this was really helpful thanks

[@ajaycheema5]

At 7:19, you subtract 0.5Y from the RHS to bring it to the LHS, why is it not a negative value on the LHS? with the equation of the IS Curve becoming Y=-500 +10r ?

[@umairahmadmalik]

+Ajay Cheema Because there is a Y on the LHS so when you bring the 0.5 Y over it becomes negative but then 1Y- 0.5Y = 0.5Y . Understand?

[@Medoooooni8]

@6:49 how did he get 250????????

[@sharonchepkoech2664]

@@Medoooooni8 he collected the liked terms I.e 120-20+100+50

[@ririeretekabu9214]

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[@nonofolechuti3389]

very well explained sir. thank you

[@tims4283]

Helpful video- thank you 🙏🏽
In a question where the inflation equals to its target 2% and real interest rate is also at 2% and output equals potential at that point. If real interest rate rose by 2% what’s the change in inflation? Also do central bank have to increase interest rate to take the economy back to equilibrium? If yes to what percent should the CB raise interest rates and how can the take the economy back to the 2% inflation target.

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[@Felix-iu1by]

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[@analecha7ebek]

Hi, i find this very helpful. But there is something i don't really understand on 06:44 when you calculate them all together, you get 250? what exactly is it that you calculate together, because i've tried everything and i don't get the same answer as u, its either under 250 or over, so please let me know how you do this. I would appreciate very much, thank u!

[@zainislam554]

Y= 400! what kind of income is it? 1- The level of income through which a particular levels of savings are generated and later on that level of savings are converted into investment or, the second option is that this y=400 came after the whole of the multiplier process took place and a particular level of income generated ?

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[@johncena3576]

At 7:14 why do you double both sides?

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[@mercykiama9208]

Very helpful

[@l.lawliet1838]

I have a problem bc in my homework the t is an equation, it’s not a simple number like 40. The equation for T is 300+.25Y. Would i just substitute it for T or do I just use .25 for T.

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[@MyMrwrestling]

how do u find price and intrest rate in the long run ?
this is the short run right?

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Thanks!

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[@umurmad3919]

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[@_naledi]

why isn't the equation 0.5Y = -250 + 10r?

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[@economicurtis]

Thanks for that!

[@paulineotieno6397]

Much appreciated....

[@gtudsd]

Does anyone know why he gets the expression +0.5y= 250-10r? Surely if you are subtracting from each side, taking the 0.5y over to the other side will make it negative, giving you -0.5y?

[@katlomolefe7946]

im here wondering the same 😭

[@study_with_samaa]

Thank you Sir 🙏

[@SaiRam00]

Sir Thank You ...Please how did we got IS curve 500-20r

[@martinkiura7727]

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[@RicoLamar987]

Why would we double both sides?

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