Dynamics and the ASAD model Consider the following model of the economy (we ignore the role of G and T on aggregate demand; also. to simplify the algebra, we assume that output depends on the interest rate only): AS: P, = P": + rti Kt} IS." Y, = b Ct} Interest rate rate: t. = a}, + mj'P, PU where o, h. c, and d, are positive parameters. a. What is the AD relation in this economy? (2 marks) b. What are the mediumrun values of P, Y and. i? (3 marks) Suppose PT =1 and Y11 = 100. e. What is the mediumrun equilibrium value of the interest rate? {2 mark) Now assume P\