In a particular economy the real money demand function is, M^d/P = 3000 + .1Y - 10,000i
Assume that M = 6000, P = 2.0 & Pie^e = .02
a. What is the real interest rate,r, that clears the asset market when Y =8000? when Y = 9000? Graph the LM Curve.
b. Repeat part a for M = 6600. How does the LM curve in thiscase compare with the LM curve in Part a.?
c. Use M = 6000 again and repeat part a for pie^e = .03. Compare the LM curve in this case with the one in part a.