14. Consider the following linear, dynamic AS/AD model of real aggregate income (Y) and the price of goods (P). Note that Eo (autonomous expenditure) and YFF (full employment income) are both exogenously given. ty of PIU Economics Property of FJU Economics Property of FIU Economi Ya = 0.5Yt + Eo - 50Pt FYt = Yo nomics Property of FIU Economics Property of FIU Economi Pt+1 = Pt + 0.005 (Yt - YFB) Eo = 2000 YFE = 3200 nics Property of FIU Economies Property of FIU Economic erty of FIU Economics Property of FIU Economics Property of FIU Economic erty of FIU Economics Property of FIU Economics Property of FIU Economic serty of FIU Economics Property of FIU Economics Property of FIU Economic perty of riu Economics Property of riu Economics property Of FIU Economics perty of FIU Economics Property of FIU Economics Property of FIU Economics perty of FIU Economics Property of FIU Economics Property of FIU Economics a. What are the long run equilibrium values of Y and P for this economy? Hint: in a long run perry equilibrium, Y+ = YFE. Suppose that at time 0, the price of goods is 1 (Po = 1). What will real income be at time 0 nomics ( Yo)? Will it be more than, less than, or equal to its long run equilibrium level? opert c.Use an AS/AD diagram to illustrate how the initial short run equilibrium values (i.e. - time onmics values) of Y and P compare to the long run equilibrium values that you computed in part a. open d. What will P and Y be at time 1? sty of FIU Economics Property of FIL Economics e. What will P and Y be at time 2? opert f.What will P and Y be at time 3 FU Economics Property of FIU Economics