You are Here: Home

# Macroeconomics help- IS Schedule equation:) watch

1. Hi guys,

Basically I'm trying to revise for my exam and my poor notetaking has caught up with me.

I can follow the following question and answer but having difficulty understanding how the next step goes from:

Y-0.6(Y)=.... to 0.4(Y)=....

been racking my brain, looking through books all to no avail. Any clarity on this would be so very appreciated.. please

The question: Consider the following numerical version of the IS-LM model:

C = 400 + 0.6(Y)
I = 700 – 40(i)
G = 100
L = 0.5(Y) – 750(I) (money demand)
M = 500 (money supply)

IS schedule:

Y = C + I + G
Y = 400 + 0.6(Y) + 700 – 40(i) + 100
Y - 0.6(Y) = 400 + 700 + 100 – 40(i)
0.4(Y) = 1,200 – 40(i)
Y = (1,200/0.4) – (40/0.4) × i
Y = 3,000 - 100 × i

xx
2. Another way to look at it is:

Y - 0.6Y = (1-0.6)Y = 0.4Y, as 1 - 0.6 = 0.4 Just a bit of algebra really! I hope that answers your question, if it doesn't let me now though
3. Get a factor of Y out and then it should make sense....
4. OMG the clouds have lifted and clarity has prevailed. Thankyou both so so much for the prompt replies, I cannot believe I've spent almost all afternoon trying to figure it out in my own weird way and it was so simple.

That's fantastic, really really appreciate that guys If I could e-buy you a drink for that trust me I would. You're my new heroes

xx

### Related university courses

TSR Support Team

We have a brilliant team of more than 60 Support Team members looking after discussions on The Student Room, helping to make it a fun, safe and useful place to hang out.

This forum is supported by:
Updated: January 15, 2010
Today on TSR

### He lied about his age

Thought he was 19... really he's 14

### University open days

Wed, 25 Jul '18
2. University of Buckingham
Wed, 25 Jul '18
3. Bournemouth University