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BED 3104 INTERMEDIATE MACRO ECONOMIC THEORY QUESTION ONE Consider an economy with the following IS and LM curves Y= 4350-800r+2G-T (M/P)= 0.5Y - 200r Suppose

BED 3104 INTERMEDIATE MACRO ECONOMIC THEORY

QUESTION ONE

Consider an economy with the following IS and LM curves

Y= 4350-800r+2G-T

(M/P)= 0.5Y - 200r

Suppose that T= 450, G=450 and M=900.

Required

a)Find an equation for the aggregate demand curve.

b)If the full employment level of output is Y=46000, what are the equilibrium value for r and p?

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