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Assume that an economy is characterized by the following equations: C = 200 + (0.75) ( Y - T) T = 1,200 G = 1,000

Assume that an economy is characterized by the following equations:

C = 200 + (0.75) ( Y - T)

T = 1,200

G = 1,000

I = 1,200 - (25) r

M s / P = M d / P = 0.5 Y - 40 r

a. Write the numerical IS curve for the economy, expressing Y as a numerical function of G, T, and r.

b.Write the numerical LM curve for this economy, expressing r as a function of Y and M / P.

c.Solve for the equilibrium values of Y and r, assuming P = 2.0 and M = 2,400.

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