Determine the long-run equilibrium values

Reference no: EM13128780

Calculate the long-run equilibrium values of r and P, assuming that the potentiallevel of output (Y*) is equal to 3500 monetary units.

Use the IS/LM and AD/AS models to illustrate graphically the short-run and long-run equilibrium, and to explain how the economy moves from the short-run to the long-run equilibrium, if the two are different C =500 + 0.75(Y-T) (2)I = 375 - 25r (3)T = 500 (4)G = 500 (5)Ms=Md (6)Ms =1000 (7)Md/P = L(r,Y) = 0.5Y - 50r

Derive the IS, LM and AD curve and find the short run equilibrium but have now come to a halt. Would be very grateful if you could show me how to work this out im really stuck.

Reference no: EM13128780

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