[20 points total] Suppose an economy is represented by the following: 0 = 1000 + 0.5*(YT)50r T: 400 | = 1200 50r G = 500 Ms=4000 P=1 L(r,Y) = Y _ 300r; (n9 = 0) srrow WORK FOR ALL CALCULATIONS. a. [4 points] Solve for the IS curve and the LM curve (both as function of r} b. [2 points] Solve for the equilibrium level of Y' and r*. c. [2 points] Solve for the value of disposable income and the government budget. Is the government running a budget decit or a budget surplus? Just state. d. [1 point] Suppose the fullpotential level of output is equal to 3800. Draw the ADHAS diagram to illustrate the equilibrium values in part b) and this fullpotential level of output. [NOTE if you were not able to solve for Y' in part b) just assume that Y\" equals 2000 and draw the diagram; if you solved for Y' in part b} use that value]. e. [1 point] Given your answer in part d) is there a positive output gap or negative output gap in the economy? Calculate it and state whether the output gap is positive or negative. f. [5 points] Continue with part e)I what policy would you recommend to bring the economy to fullpotential? Identify the exact policy and then discuss in detail how the policy would close the output-gap. l.e. Discuss the policy that will restore full-potential. Provide an intuitive discussion. (do not draw the impact of this policy on the gure in d); g. [1.5 points] Redraw the ADAS diagram from part d) and illustrate the impact of the stabilization policy (that you discussed above in part i). h. [1.5 points] Look at your answer in part d. If no policy is used to restore fullpotential level of output. what would be the impact on P in the LR? Just state. Would this be illustrated as a movement in AD or a shift in AD? Just state. i. [2 points] Consider your answers in ad. If no active policy was used to restore output in the economy. what would be the value of P in the LR? Calculate, showing work