=+22. Consider an economy described by the following: C = $4 trillion I = $2 trillion G

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=+22. Consider an economy described by the following:

C = $4 trillion I = $2 trillion G = $3 trillion T = $3 trillion NX = $1 trillion f = 0 mpc = 0.8 d = 0.25 x = 0.05 l = 0.5 r = 1

a. Derive expressions for the MP curve and the AD curve.

b. Calculate the real interest rate when π = 4% and p = 6%.

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