2. In a particular economy, the real money demand function is = 200 + 02¥—2000%. Assume that M= 300, P=2.0, andw° = 0.05,

a, What is the real interest rate r that clears the asset market when ¥ = 500? when Y= 600? Graph the LM curve, 1b, Repeat part

(a) for M=360. How does the LM curve in thiscase compare with the LM curvein part (a)? ¢. Use M=300 again and repeat part

(a) fora” =0.04. Compare the LM curve in this case with the one in part (a.