3. All three markets - Flexible Prices (27 pts) Suppose the production function in an economy is Y = A(3N 0.005N2) Suppose that. A = 2. The labor supply curve. is N5 = 60 + 8w+ 0.01T Where N' is the quantity of labor supplied. in is the real wage. (This is just a labor market you've dealt with before Remember that the labor demand (turve Comes from the MPN). Desired consumption and investment are: c:cf = 100+ 0.8(Y T) 1001' Id =1004501' Taxes, T, and government purchases, G. are Money Demand is d} M? = 0.3Y 2500" + 9) The expected rate of inatiOn, are. is 0.02 and the nominal money supply, M 3, is 250 (a) (h) (6 pts) \":7th are the general equilibrium levels of the real wage. employment and output? (You will need labor demand 50 you need the FCC with respect to Labor) (5 pts) Utilizing your results from the labor market for output. Find the goods market equilibrium. \\Vhat are the general equilibrium values of the real interest rate, consumption, investment. (4 pts) Using your results from (a) and (11), now nd equilibrium in the money market. \"that is the general equilibrium value of the price level? (6 pts) Suppose that. govermnent purchases increase to G'7'2.5. Assume this coincides with an equal increase in taxes. First demonstrate on a graph how that impacts the three markets (you don't. have to graph them exactly just roughly). Now what are. the general equilibrium values of the real wage, employment. output, the real interest rate, ennsumption, investment and the price level