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2.Suppose the economy is characterized by the following equations. IS curve: a = 30.30 0.0015Y LM curve: % = Y 5000' + 7T6) SRAS curve:

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2.Suppose the economy is characterized by the following equations. IS curve: a" = 30.30 0.0015Y LM curve: % = Y 5000' + 7T6) SRAS curve: Y = 7 + 100(P P5) The nominal money supply is M = 59, 400, expected ination is we = 0.10, and full employment output is Y = 20, 000. a) If the economy begins in general equilibrium, what are the equilibrium values of the price level, output and the real interest rate? b) if the expected price level is the price level your found in part (a), what happens to the price level, output, and the real interest rate in the short run if there is an unanticipated decrease in the nominal money supply to 49281.25

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