# Question: islm model consider a closed economy characterized by ...

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IS-LM Model:Β

Consider a closed economy characterized by:

πΏπ π =0.4Y

πΏπ π =350β500π

The (nominal) money supply is equal to 1250 and the price level is 1.

i. Draw the LM curve in the (Y,i)-plan.

ii. Find algebraically and compute the slope of the LM curve. Suppose that the Central bank reduces the money stock by 100.

iii. Represent graphically the impact on the LM curve.

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