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Consider the following economy with: Real Money demand (M/P)^d = - 12 R + 0.38 Y; Real Money supply (M^s/P)= 4510
a) Derive the LM curve
b) Derive the LM curve when the money supply increases by 680.
c) Derive the LM curve when money supply decreases by 12%
d) Compare the LM curves from a, b and c by graphing them using any graphing tool (excel preferably). Comment on the differences.
e) Find the value of money demanded when income Y = 15,000 and interest rate R = 5. Is this equilibrium? Why? Why not?
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