Consider an economy with the following IS, shortrun aggregate supply, and monetary policy curves: (C'+fd,}E-l-C_?+N_Xmpc>

Consider an economy with the following IS, short-run aggregate supply, and monetary policy curves: (C + df + G + NX mpc > < T) 1 mpc 2 + 0.5(Y Y P), r max {77, r -4- ( 1 mpc (1) (2) (3) Use the following parameter values to answer the questions below: c 1.4 1 1.2 YP 10 - 0.6 mpc NX 1.3 d = 0.3 .fl x = 0.1 - 1.5 (a) Derive expressions for the upward-sloping and downward-sloping parts of the aggregate demand curve. [use the parameter values above.] (b) Find the values of Y and at which the aggregate demand curve switches from downward sloping to upward sloping. (c) Find the long-run equilibrium level of output and inflation when monetary policy is (i) constrained, (ii) unconstrained. (d) What is the short-run equilibrium in this model? Is monetary policy constrained or unconstrained at this equilibrium? How do you know? (e) Plot the aggregate demand, short-run aggregate supply, and long-run aggregate supply curves. Be sure to label your figure.