3. WHAT IS THE EFFECT ON THE EQUILIBRIUM REAL OUTPUT & EQUILIBRIUM REAL INTEREST RATE IF THE M/Ps DECREASES BY P500? THE QUALITATIVE ANSWERS MUST BE SUPPORTED WITH PROPER STEP-BY-STEP SOLUTIONS. NO PROPER SOLUTIONS, NO MERIT.

THERE IS ONLY ONE ANSWER BECAUSE THE GIVEN IS BASED ON YOUR SURNAME:

Given: Ca = 645; mps = 0.3; I = 550 + 0.25Y - 3000i; G = 500; Ta = 150; t = 0.25; M/Pd = 6Y - 6000i and M/Ps = 5,500.