Essay
Let us derive an aggregate-demand curve starting from some money demand and money supply equations. Assume the money-demand curve is MD=150 - 15r + Y, the price level depends on r according to the equation P = 100 - 10r, and the money supply is MS = 100. Find a relationship between the price level P and output Y and show that the relation that you have found is an aggregate demand function.
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From the money market equilibrium condit...View Answer
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