Assume That an Economy Is Characterized by the Following Equations

Essay

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
M^s / P = M^d / P = 0.5Y - 50r
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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 = 1.0 and M = 1,200. How do they change when P = 2.0? 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.