00:01
Hello, in this question we are given y, c, i, g this is investment, this is consumption.
00:13
So we are given consumption function, we are given government spending, this is the output, we are also given the taxes.
00:33
Now for the is curve from our concepts we know that output is equal to consumption plus investment plus government spending.
00:49
So we put in the values of the equation that have been given to us, y minus 100 times 1000 plus 1000 minus 50r plus 1000.
01:13
When we solve this equation we get 0 .25 y is equal to 1500 minus 50r.
01:26
Solving further we get 6000 minus 200r.
01:32
This is the curve for, this is the equation for is curve.
01:38
So if we have to plot this, we take output on the x -axis and the interest rate r on the y -axis.
02:02
Is curve with a negative sign we understand it's a downward sloping curve.
02:10
If you have to plot the intercepts we can take y as 0 and r will come out to be 30 and if you take r as 0, y comes out to be 6000.
02:29
So you can also find the intercepts like this.
02:32
So this might be 6000 and this might be 30.
02:36
So if you join these two points, we mathematically plot this curve like this.
02:51
Now moving on for the lm curve we have m by p is equal to y minus 200r.
03:05
So we know the values which are given to us.
03:12
This equation comes out to be plus 200r.
03:20
Now there is a positive relationship between output and interest rate here...