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(10 percent) In a particular economy the real money demand function is Assume that M = 300, P = 2.0 and e = 0.05. What

  1. (10 percent) In a particular economy the real money demand function is

Assume that M = 300, P = 2.0 and e = 0.05.

  1. What is the real interest rate r that clears the asset market when Y = 500? When Y = 600? When Y = 700?
  2. Graph the LM curve?

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