Assume the following model of the closed economy in the short run, with the price level (P) fixed at 1.0:

C=0.5(Y-T)

T=1000

I=1,500-250r

G=1,500

MdP=0.5Y-500r

Ms=1,000

1. Derive a numerical formula for theIScurve, showingYas a function ofralone.
2. Derive a numerical formula for theLMcurve, showingYas a function ofralone
3. What are the short-run equilibrium values ofY,r, and national saving (S)?
4. Assume thatGincreases by 1,500 (i.e.,G= 3;000). By how much willYincrease in short-run equilibrium?
5. You are the chief economic adviser in this hypothetical economy. Do you believe that fiscal policy is more potent than monetary policy? Briefly discuss
6. Derive the numerical aggregate demand (AD) curve for this economy, expressingYas a function ofP