00:01
So as the question says, we need to equate these things, right? remember that islm is a story about output and the real interest rate.
00:10
We have a downward sloping is curve, right? you see that this coefficient is negative.
00:15
Y is equal to 1700 minus 100 r.
00:19
So we have a downward sloping is curve, right, reflecting that negative sign.
00:25
And the lm curve is upward sloping, right? it is y is equal to 500 plus 100 r, right? positive means you've got a positive slope.
00:39
They're both straight lines, though in general they don't have to be.
00:43
So i'm going to set these things equal, right? so the intersection is going to be where the y is are equal or the rs are equal.
00:50
So i will set equal to each other to solve for r.
00:56
1 ,700 minus 100 r is equal to 500 plus 100 r.
01:03
Now i bring like terms together.
01:07
I get 1 ,200 is equal to 200 r...