Assignment:
Suppose a closed economy:
C=200 + 0.60(Y-T)
I =100- 10R
G =250
T=200
M =2000
(M/P)d = 2Y - 100R
SRAS: P= 4
LRAS : Y=900
1-Find an expression for the IS curve
2- Find an expression for the LM curve
3-Find short run equilibrium level of output, price, and real interest rate.
4- Find an expression for the Aggregate Demand Curve (AD).
5- Find the long run equilibrium level of output, price, and real interest rate.
6- Draw your results from parts 3, 4 and 5 using the IS-LM model and the AD-AS model and explain in your own words the expectation transition if any. If your results were the same, then explain its meaning