Write the numerical aggregate demand curve for this economy

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Reference no: EM131108567

Assume that an economy is characterized by the following equations: C = 100 + (2/3)(Y – T) T = 600 G = 500 I = 800 – (50/3)r Ms/P = Md/P = 0.5Y – 50r

a. Write the numerical IS curve for the economy, expressing Y as a numerical function of G, T, and r.

b. Write the numerical LM curve for this economy, expressing r as a function of Y and M/P.

c. Solve for the equilibrium values of Y and r, assuming P = 2.0 and M = 1,200. How do they change when P = 1.0? Check by computing C, I, and G.

d. Write the numerical aggregate demand curve for this economy, expressing Y as a function of G, T, and M/P.

Reference no: EM131108567

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