C=1000+.65(Y-T),I=100+.1Y-10r,G=400,T=.35Y-100,X-M=700-.15Y
If the government spending increases by 250,the IS curve is given by
a)Y=3370.5-15.9r
b)Y=3609.6-15.9r
c)Y=4008.0-15.9r
Can any one please help me with this one…
They need to tell you how r affects (S – I); I don’t see that here.
r =real interest rate, just checked
I know what r is; the question is how it affects (S – I).
Sorry sir ,what ever information was given i have provided.Personally i found the wording of this question very ambiguous .
The answer to this question is given as :c)Y=4008.0-15.9r
But no explanation of how they got this is given!!!
Wouldn’t you just increase G from 400 to 650, then solve the equation C+I+G+(X-M)?
Y=C+G+I+(X-M)
Solve for Y and you’ll get the answer.
My point is that even if you solve any of these, you haven’t introduced r into the equation, and the answer has r in it. r has to come from somewhere.
S2000magician, wouldn’t the equation for “I” introduce r? Or are you talking about something else?
I=100+.1Y-10r
My mistake: I missed the r.
Back in a flash.
Now since the confusion is over…pls can i get a solution to this problem?? 
Just a bunch of algebra:
Y = C + G + I + (X – M)
Y = 1,000 + 0.65(Y – T) + (400 + 250) + 100 + 0.1Y – 10_r_ + 700 – 0.15Y
Y = 2,450 + 0.6Y – 0.65T – 10_r_
0.4Y = 2,450 – 0.65(0.35Y – 100) – 10_r_
0.4Y = 2,450 – 0.2275Y + 65 – 10_r_
0.6275Y = 2,515 – 10_r_
Y = 4,007.968 – 15.93625_r_
Thanks sir
either i have forgotten everything about CFA or my L1 in 2010 never had this before
You’re welcome.