Answer the questions

2- The following equations describe the economy, - C = too+ on v I I= ll- l i I [i='-Ii Initially, government expenditure is $550, and taxes are $500- The real money supply equals $9. e. Derive the formulas for the IS curve and LM curve- (Jpn) b. What are the initial levels of GDP, the interest rate, eonsumption, and investment? (rm) {loving to a drop in investor I::.ondent:e1 the autonomous component of mvestmenj: drops by 90, o. By how much do income, the interest rate, and inveenrtent drop? (3pm) d.. By liov.r much should the money supply he changed in order to return GDP to its original level? What will the new interest rate had (3pm) I}. Draw three graphs to illustrate the equilibria in h, o, and d- (Spits) 1. [Market Equilibrium I - Consumers and Producers Surplus, Price Floor] Find (a) equilibrium price, (b) equilibrium quantity, (c) consumers' surplus, (d) producers' surplus, and (e) total surplus for the following markets. Qd21252P Q,=45+8R What is the surplus or shortage if lhe government imposes a price oor of P = 20 in this market. 2. [Market Equilibrium II - Comers and Producers Surplus, Price Ceiling] Find (a) equilibrium price, (b) equilibrium quantity, (c) consumers' surplus, (d) producers' surplus, and (e) total surplus for the following markets. QM+W=O lygmzo What is the surplus or shortage if the government imposes a price ceiling ofP = 2 in this market. intercept for the new model. S=o it becomes yr = 13in + Hi, (3) where every variable is a scalar. Suppose that (112;, air) is independent and identically distributed across 2', and {11,1- | i = 1...,N} is independent of {mi | 3' = 1 .. .,N}u1- is an error term satises that Em] : 0 and Ehrf] : I. In addition, let E[:L',;] : 1 and ELIE] = 2. While calculating the standard errors, one always needs to consider the value 2 of E [ 25:1 mini] . Please calculate its value and provide the detailed steps. (4 points)