April 25, 2003

Friday's Review Session

Derive the IS and LM curves.


You can think of these derivations as instances of the implicit function theorem or you can regard them as solving two equations (shown above) in two unknowns (Y and R).


Can you show that bonds suffer more from an increase in inflation than do bonds?

Finally, can you figure out which was to shift when there are six possibilities? Hint: read the question carefully.


Posted by bparke at April 25, 2003 03:21 PM